High GST rates, interest costs subdue India’s July auto sales

Liquidity constraints along with high Goods and Services Tax (GST) rates and interest costs continued to subdue Indian automobile sales during July.

According to Sridhar V., Partner with Grant Thornton India: “Huge drop in sales for passenger vehicles shows no signs of improvement. One small solace is the marginal improvement on sequential basis over June 2019.”

“The factors which have been influencing the negative growth the previous months continue to make further dent. Industry hopeful of some positive changes creeping in with monsoon and festival season whose effects possibly can be only seen in the coming months of September and October.”

Automobile major Maruti Suzuki India’s overall sales including exports for July declined 33.5 per cent to 109,264 units from 164,369 units’ off-take recorded during the corresponding period of the last financial year.

The company’s domestic sales (domestic and OEMs) decreased 35.1 per cent on an year-on-year basis to 100,006 units in July.

Although, the total domestic passenger vehicle sales was lower by 36.7 per cent to 96,478 units on a YoY basis, the company’s sales of light commercial vehicles in the country inched up 0.5 per cent to 1,732 units.

The automobile major’s exports declined by 9.4 per cent in July to 9,258 units from 10,219 units which were shipped out during the corresponding month of last fiscal.

Similarly, Hyundai Motor India’s overall sales including exports slipped by 3.8 per cent during the month under review to 57,310 units from 59,590 units in July 2018.

The company’s domestic sales in July edged lower by 10 per cent to 39,010 units from 43,481 units sold during the same month in 2018. However, exports went up by 13.6 per cent to 18,300 units from 16,109 units in July 2018.

On its part, Mahindra and Mahindra (M&M) reported a decline of 15 per cent in its total vehicle sales which fell to 40,142 units last month, against 47,199 units sold during the corresponding period of 2018.

The company’s domestic sales plunged by 16 per cent to 37,474 units from an off-take of 44,605 units in the like period of last year.

However, M&M’s exports inched higher by 3 per cent to 2,668 vehicles in July.

In the two-wheeler segment, Hero MotoCorp, however, reported sales of 535,810 units down from 679,862 units sold during a year-ago period.

Honda Motorcycle & Scooter India’s total sales fell to 489,631 units from 548,751 units sold in July 2018.

On the other hand, Suzuki Motorcycle India reported a growth of 18 per cent in its overall sales to 69,236 units from 58,805 units sold in the corresponding period of last year.

Meanwhile, Korean automobile major Hyundai Motor is developing an electric vehicle for the mass market and will launch it in a couple of year’s time, said a top company official in Chennai, Tamil Nadu state.

“Hyundai Motor is transforming into a mobility solutions provider from and automobile company,” S.S. Kim, Managing Director and CEO, Hyundai Motor India told reporters last week.

Tamil Nadu Chief Minister K. Palaniswami last week flagged off Hyundai Motor India’s electric sports utility vehicle (SUV) KONA Electric at the state secretariat in Chennai. Palaniswami also had a ride in the electric vehicle.

According to the release, Hyundai Motor India and the state government had signed a memorandum of understanding, whereby the company would invest Rs7,000 crore for expansion and rolling out electric cars.

“It is a moment of pride to share that the KONA Electric, India’s first fully electric SUV, will be made in Tamil Nadu from our state-of-the-art manufacturing plant in Chennai,” Kim said.

He said the KONA Electric model has got 120 confirmed bookings within 15 days of its launch.

On the company’s plans for hybrid vehicles, Kim said Hyundai Motor has the technology but the Indian government is not supportive of hybrid models so there is no incentive for the company.

“The group is developing an electric vehicle platform for mass market in India. We develop cars for all and not just for ride hailing cab operator Ola, where Hyundai has invested $300 million,” Kim said.

When queried as to the leverage Hyundai Motor has with its investment like Ola asking its driver partners to go for Hyundai Motor models, Kim said it is an important investment for the group.

In March, Hyundia Motor and its affiliate Kia Motors announced an investment of Rs2,068 crore ($300 million) in Ola.

As per the agreement, the three companies will collaborate on building India-specific electric vehicles and infrastructure and developing unique fleet and mobility solutions, Hyundai Motor had then said.

Indo-Asian News Service