Cash Crunch Puts The Brakes On Automobile Sales In December
The two-wheeler segment was probably the worst hit last month.
The month of December was probably the best indicator of the impact of demonetisation on the automobile sector, as wholesale sales fell across categories. Unlike in November, even Maruti Suzuki India Ltd. was not spared this time despite a surge in exports.
Commercial vehicle sales for some automakers were marginally higher on a year-on-year basis, presumably due to pre-buying before the Bharat Stage-IV norms take effect from April 1, while passenger vehicle despatches fell for most, largely due to the continued impact of demonetisation.
Market leader in the passenger vehicle segment, Maruti Suzuki, posted a 4.4 percent fall in its domestic sales, and despite a 47.1 percent surge in exports, the automaker’s total sales were down 1 percent.
The impact of demonetisation and the subsequent cash crunch were most evident in the mini hatchback segment, one that includes India’s highest-selling car, Alto, and the Wagon R. Maruti Suzuki’s mini hatchback sales fell by as much as 15.3 percent. The automaker managed to post sales growth in only two segments- utility vehicles, which includes the recently-launched Vitara Brezza compact SUV, and the mid-sized sedan segment.
A similar story played out at peer Mahindra & Mahindra Ltd, which saw its passenger vehicle sales decline 8 percent, even as its commercial vehicle sales rose 14 percent. “The auto industry continues to go through challenging times, grappling with the short-term effects of demonetisation as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months,” Pravin Shah, president and chief executive of the automotive segment said in the company’s filing to the stock exchanges.
Tata Motors Ltd. managed to post a rise in its passenger vehicle sales, aided by a lower base and sales of its recently-launched Tiago hatchback. The automaker posted a 2 percent growth in its total vehicle sales at 40,944 units. Passenger vehicle sales rose 35 percent.
Hyundai Motor India Ltd. reported a 4.3 percent fall in domestic sales, while its exports plunged 23.2 percent.
Two-Wheelers Take A Hit
The two-wheeler segment is known to be a better indicator of the rural economy as a sizeable portion of sales come from these areas.
December sales at the country’s largest two-wheeler manufacturer Hero MotoCorp Ltd. fell 34 percent in December to 3,30,202, versus December 2015.
Pune-based Bajaj Auto Ltd. reported a sharp 22 percent fall in its total sales at 2,25,529 units, even as its motorcycle sales dropped 18 percent at 2,03,312 units.
TVS Motor Company Ltd. saw total sales fall 8.5 percent during December at 1,84,901 units. The automaker’s motorcycle sales totalled 1,79,508 units, down from 1,94,001 units sold a year ago.
Eicher Motor Ltd.’s Royal Enfield, presently in the 350cc-plus motorcycle category, reported yet another month of a rise in its sales. But Royal Enfield motorcycles have an average waiting period of four-five months, meaning despatches in December would have been for bookings made before November 8.
Second-placed Honda Motorcycle and Scooter India, had not declared the sales numbers for December at the time of filing this report.
Muted October-December Quarter
The October-December quarter, of which two months experienced the post-demonetisation cash crunch, was largely subdued for automakers, barring some exceptions. The numbers could be an indicator of the monetary performance that could be expected from the respective automakers during the quarter, barring factors such as discounts, and other expenses and gains.
Maruti Suzuki witnessed only a 3.4 percent rise in its total sales during the period at 3,87,251 units.
Tata Motors, a little better off thanks to the response to the Tiago, managed an 8.4 percent rise in total despatches during the quarter, to 1,32,657 units. The number includes only Tata Motors’ numbers, as those of its cash-cow subsidiary Jaguar Land Rover are not detailed till later in the month.
Mahindra & Mahindra witnessed a 7.6 percent decline in volume during the third quarter of the fiscal. The company sold a total of 1,20,870 units during the period, compared with 1,30,888 units a year ago.
Eicher Motors, a clear outperformer in the sector, posted a 38.2 percent growth in sales volume during October-December, at 1,23,838 units.
Bajaj Auto, now aspiring to compete with Eicher Motors’ Royal Enfield in the mid-displacement segment, reported a 10.5 percent fall in sales volume. Bajaj Auto, heavily dependant on exports, has suffered due to the adverse macro-economic situation in importing countries in Latin America and Africa.
Chennai-based Ashok Leyland Ltd. witnessed a 6.2 percent fall in total sales volume, to 32,838 units.
