One Of India’s Largest Auto Dealers Has Beaten The Slowdown
India’s prolonged auto slowdown hasn’t hurt one of the largest dealers of cars, motorcycles and scooters in the country. In fact, sales spiked.
The Canteen Stores Department, which runs 4,500 outlets nationwide, reported nearly Rs 5,940 crore revenue through automobile sales in the year ended March, according to a senior official who didn’t want to be identified as the numbers are not public. That’s a 40 percent jump from around Rs 4,200 crore last year, he said.
The segment emerged as the biggest sales driver for the defence ministry-operated non-profit chain. The stores—which sell directly to families of defence personnel at discounted tax rates—earned nearly a third of its total revenue of Rs 18,900 crore from automobiles.
That comes when indicators like auto sales and consumer goods volumes suggest that consumption is slowing in India. Demand for cars and two-wheelers has either fallen or remained flat since the festive season last year. That led to an inventory pile-up at dealerships. But vehicle sales at canteen stores didn’t come at the expense of other sellers.
The department procures its vehicles through existing authorised dealers and no one loses out, said Saharsh Damani, chief executive officer of Federation of Automobile Dealers Association. “But it’s the only subset that is performing well.”
This isn’t the first time that the canteens have seen auto sales spike so much. They jumped in 2016-17 as well, Ankit Merchant, equity research analyst at SMC Global Securities Ltd., told BloombergQuint over the phone without giving the growth rate. At that time, implementation of ‘one rank, one pension’ for defence personnel and higher salary after the Seventh Pay Commission helped, he said.
Last year, introduction of the goods and services tax contributed to higher sales through canteen stores. Some states didn’t offer rebates under the previous tax regime, according to the official quoted earlier. Under the GST, the stores get 50 percent concession on indirect taxes imposed by the state and central governments. That, the official said, helped standardise prices across the CSD network.
Cars Sales The Mainstay
Car sales contribute nearly 90 percent to the canteen stores’ revenue from the automobile segment, the official said. The motorbikes and scooters comprise the rest.
Maruti Suzuki India Ltd., India’s largest passenger vehicle maker with half the market share, accounted for 60 percent of the cars sold through canteen stores, according to the official.
The Baleno hatchback was Maruti Suzuki’s most-sold automobile under the canteen stores department, Shashank Srivastava, the automaker’s executive director of marketing and sales, told BloombergQuint in an email. “Other popular models include the DZire, Swift, Vitara Brezza, Ciaz, Alto K10, Celerio and Wagon R.”
Srivastava also said that monthly sales from the canteen stores have grown threefold from nearly 1,500 units around four-five years ago.
Hyundai is yet to respond to BloombergQuint’s emailed queries.