India’s auto sales continue to slump for eighth straight month

Revival in auto sales seems to be in the waiting for now, as domestic sales declined for the eighth consecutive month in June. The decline in demand is attributed to the rise in cost due to newly-implemented safety norms, along with a liquidity crunch.

Maruti Suzuki India on Monday reported a 14 per cent decline in total sales at 1,24,708 units in June against 1,44,981 units in the same month last year. Domestic sales during the month were down 15.3 per cent at 1,14,861 units last month compared to 1,35,662 units in June last year, the company said in a statement.

Tata Motors also reported a 14 per cent decline in its total domestic sales at 49,073 units in June. The company had sold a total of 56,773 units in the same month last year, Tata Motors said in a regulatory filing.

Its passenger vehicle sales in domestic market dropped by 27 per cent to 13,351 units, as compared with 18,213 units in June 2018 on weaker customer sentiments due to liquidity crunch, the company said.

Similarly, Mahindra and Mahindra reported a 6 per cent decline in total sales to 42,547 units in June. The company had sold 45,155 units in the corresponding month last year, M&M said in a statement. Domestic sales of the company declined by 5 per cent in June on a year on year basis to 39,471 units. Other companies also reported a dip in sales.

Toyota India joint venture’s domestic sales declined 19 per cent annually to 10,603 cars in June from 13,088 units in the same month last year, the company said on Monday.

“Exports also declined 25 per cent annually to 762 units in June from 1,014 in the like month a year ago,” said the city-based Japanese subsidiary in a statement.

Combining domestic and export sales, the overall sales declined 19 per cent annually to 11,365 cars in June from 14,102 units in the corresponding month a year ago.

“The Indian automobile industry has been witnessing a continuous decline in domestic sales owing to several factors, which have contributed to the weak consumer sentiment,” said Toyota Kirloskar Motor Deputy Managing Director N. Raja in the statement.

In the first six months of 2019, domestic sales declined 10 per cent to 68,652 cars from 75,992 units in the same period in 2018.

“Economic uncertainty, subdued or deficit monsoon, high interest cost, tight liquidity and apprehensions over BS VI introduction in a few months have fuelled the slowdown,” Raja said.

The company hopes the ensuing Union Budget would address the need for a positive growth in the economy for better sentiment in the auto industry.

“We look forward to measures to boost the manufacturing industry to improve customer demand,” added Raja.

The two-decades-old JV of Japan’s Toyota Motor Corporation and the Pune-based Kirloskar Brothers rolls out multi-utility vehicle Innova, SUV Fortuner, Corolla Altis, Toyota Yaris, Camry and four Etios variants at its manufacturing plant at Bidadi, near here, and imports the Prade, Prius hybrid and Land Cruiser as completely-built units.

Toyota Kirloskar Motor (TKM) launched premium hatchback Toyota Glanza, which is based on Maruti Suzuki’s Baleno.

Earlier, the two companies had entered into an agreement for re-branding and distribution of select products from each other’s vehicle portfolio.

Accordingly, the company has priced the vehicle’s manual transmission model between Rs7.21 lakh and Rs7.58 lakh and automatic variant in the range of Rs8.29 lakh to Rs 8.90 lakh.

The premium hatchback’s variants have been equipped with a new BS-VI compliant ‘K series’ petrol engines.

Meanwhile, the output of India’s eight major industries rose by 5.1 per cent in May 2019, official data showed on Monday.

The index of eight core industries was lower compared to April 2019 when it rose by 6.3 per cent, while on a year on year basis, it rose from 4.1 per cent in May 2018, a Commerce Ministry statement said.

The core sector index carries 40.27 per cent weight of the items included in the Index of Industrial Production (IIP), the ministry data showed.

The decline in growth rate compared to last month was on the back of negative growth of 1.5 per cent and 1 per cent in refinery products and fertilisers segments, respectively.

Steel and electricity recorded strong growth of 19.9 per cent and 7.2 per cent respectively.

“Steel production (weight: 17.92 per cent) increased by 19.9 per cent in May 2019 over May 2018. Its cumulative index increased by 19.4 per cent during April to May 2019-20 over the corresponding period of previous year,” the statement said.

“Electricity generation (weight: 19.85 per cent) increased by 7.2 per cent in May 2019 over May 2018. Its cumulative index increased by 6.6 per cent during April to May 2019-20 over the corresponding period of previous year.”

Consumers sentiment is expected to remain stuck in the slow lane for the auto industry, as anxiety over financing constraints and farm distress dent the sector’s sales.

The slowdown in auto sales reflect the picture of the Indian economy, which is being dragged by low demand especially from rural areas.

Alarmingly, a slowdown in the sector will have a cascading impact on other industries like steel and most importantly on job creation.

Indo-Asian News Service