June Auto Sales Suffer Due To Looming New Tax
The auto industry faced a slowdown in June as buyers were unsure of the GST regime.
June was a tough month for most automobile manufacturers as uncertainties surrounding the implementation of a Goods and Services Tax impacted sales.
Maruti Suzuki Ltd. and Eicher Motors Ltd. were among the automakers that witnessed an increase in sales in June, albeit at a slower pace than expected. On the other hand, Mahindra & Mahindra Ltd., Hyundai India Ltd., and Tata Motors Ltd. all saw their monthly sales fall compared to a year ago.
This mixed-bag of a performance was anticipated by analysts who said dealers would reduce the stock they held before GST was implemented on July 1. This due to availability of only partial credit for tax paid before GST.
"Volumes are expected to remain weak due to destocking at dealer level and postponement of purchases by customers due to GST-related uncertainity", brokerage Motilal Oswal had said in a research note on Friday.
Here's how automakers fared in June:
Maruti Suzuki Posts Lowest Sales Volume In A Year
India's largest carmaker Maruti Suzuki reported its lowest monthly sales figure in the last 12 months as domestic demand remained subdued.
Total sales went up 7.6 percent over the same period last year to 106,394 units, which is lower than Maruti’s sales in December 2016, the month after demonetisation, when a cash crunch hit the entire industry. A 96 percent jump in exports helped boost sales growth in an otherwise flat quarter for the automaker.
.jpg?auto=format%2Ccompress)
Popular models like the Alto and WagonR, in the ‘mini’ segment recorded a fall in sales, while the utility vehicles segment saw sales rise by 43 percent led by the S-Cross and Vitara Brezza.
Mahindra Sales Fall For Third Straight Month
Mahindra and Mahindra saw auto sales fall 4 percent over last year, registering a third consecutive month of decline.
The largest sports utility vehicle maker in India said, in a media statement, that sales fell as the company focussed on minimising dealer level stocks to reduce transition losses from the implementation of GST.
Total domestic sales remained flat, while exports fell 56 percent over last year. Utility vehicle sales decreased marginally by 2 percent, while sales of commercial vehicles rose 12 percent.
M&M's tractor division sold 13 percent more units at 31,522 in June.
Royal Enfield's Premium Bike Sales Continue To Disappoint
Eicher Motors, maker of the Royal Enfield brand of motorcycles, registered a 25 percent sales growth in June backed by strong demand for its smaller engine capacity bikes.
Sales of bikes up to 350cc engine capacity increased 31 percent to 58,741 units compared to the same month last year. However, Royal Enfield’s premium bike sales continued to tumble for the fifth straight month. Sale of models over 350 cc engine capacity fell 22 percent to 4,419 units.
%20(1).jpg?auto=format%2Ccompress)
Exports too declined for the first time since January 2016 with the company sending 8 percent fewer motorcycles outside India.
"Low Buying Sentiment” Hits Tata Motors
Tata Motors Ltd. saw a 9 percent fall in total sales as mixed consumer sentiment towards the implementation of GST hit demand for cars.
Passenger vehicle sales fell 10 percent over the last year to 12,482 units as the anticipation of GST triggered "low buying sentiments", said Tata Motors in a media statement.
The drop in volume is seen temporary and will be recoevered in the quarter to come.Tata Motors Media Statement
Commercial vehicle sales for India's largest player in the segment fell 2 percent to 25,678 units over the same period last year. But the business grew on a monthly basis as the company ramps up its production of Bharat-Stage IV compliant vehicles.
Exports fell 40 percent from last year, to 5,807 units.
Hyundai India's First Blip Of 2017
Hyundai India Motor Ltd. reported a decline in sales for the first time in 2017.
India's second largest car maker sold 37,562 units in June, a fall of 5.6 percent over the same month last year. However, this was still Hyundai's best ever sales performance for the first six months of the year.
The company now expects a heightened level of demand following the implementation of GST, it said in an emailed media statement.
Atul Auto's Sales Remain Flat
Atul Auto Ltd., a Gujarat-based three-wheeler manufacture saw sales decrease marginally by 1.5 percent in June over the same month last year.
The company which makes auto rickshaws and three-wheeler commercial vehicles sold 3,288 vehicles as compared to 3,339 vehicles last year.
Hero Motocorp Ltd., Bajaj Auto Ltd., TVS Motor Company Ltd., Ashok Leyland Ltd., and Honda India Ltd. are yet to report their monthly sales for June 2017.