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Moderate car sales despite year-end discounts and offers

Automobile companies revealed their monthly despatch details for December 2018 and it is quite clear that buyer sentiment is down and rather sharply at that. Given that the bellwether of the industry, Maruti Suzuki India posted a flat one per cent growth in December 2018, expect overall industry numbers to mirror the leader’s performance.

The passenger vehicle industry has been feeling the pace of slowing sales right from July, which went on to impact the festive season. As the festive months of October and November turned out to be anything but festive, December despatches have ranged from low to moderate as manufacturers look to optimise leftover inventories at dealerships.

Maruti Suzuki clocked overall domestic despatches of 1,19,804 units, registering marginal growth of one percent compared to 1,18,560 units in December 2017.  A notable decline came from entry-level cars which was down 14 percent with the combined sales of Alto and Wagon R declining. A big reason for this could be the minimal production of the current-generation Wagon R, which is nearing its end of life, as Maruti is all set to introduce the new model on January 23, 2019.

The quintet of Baleno, Celerio, Dzire, Ignis and Swift too saw a sales slump, but relatively lower at 3.8 per cent with cumulative sales of 51,334 units (December 2017: 55,336 units). Premium Ciaz sedan on the other hand, registered smart 98.7 per cent growth, with 4,734 buyers choosing the car as against 2,382 buyers in December 2017. Maruti’s vans, Omni and Eeco, registered a good growth as well. The compact crossovers, including the Vitara Brezza, Gypsy and the S-cross, saw a moderate growth.

Hyundai Motor India registered cumulative domestic sales of 42,093 units last month to record a marginal growth of 4.8 per cent (December 2017: 40,158 units). Its Grand i10 and Elite i20 hatchbacks, Verna sedan and Creta SUV remained key performers all through the year. And while the company revived the Santro brand in October, it is yet to be seen how the car has actually fared with the masses it’s meant for, considering it has been slightly optimistically priced by Hyundai this time around.

Mahindra & Mahindra (M&M), which recently launched its new flagship, the Alturas G4, and the Marazzo reported despatches of 15,901 cars in December 2018, down 3 percent on year-ago numbers (December 2017: 15,543 units). For April-December 2018 period, cumulative PV sales of 1,77,074 units, exhibited flat growth of zero per cent. Commenting on the performance, Rajan Wadhera, president, Automotive Sector, M&M, said, “We are happy to have ended the first nine months of the year on a positive growth of 13 per cent in PVs and CVs, domestic and exports, and are particularly buoyed by our ongoing strong performance in exports. However, in the domestic market, challenges relating to tight liquidity and low buying sentiment continue the de-growth for December. We hope to see good performance in fourth quarter owing to the anticipated rural demand because of the harvesting season and the launch of our new XUV300 in February 2019.”

Tata Motors, which has been having a good off-take at the showrooms for the past year, also saw numbers slow down. The company’s PV division recorded a flat growth of one percent, at 14,260 units (December 2017: 14,180 units), albeit demand continued for its new-generation PVs like the Tiago, Tigor and Hexa. Nonetheless, Tata Motors has reported a robust sales performance for the April-December 2018 period: 1,56,397 units, up 21 percent over (April-December 2017: 1,29,229. Commenting on sales, Mayank Pareek, president, passenger vehicles unit, Tata Motors, said, “In December 2018, we strived to maintain our growth trajectory during what was a rather sluggish period for the entire auto industry. Despite the challenging environment last month, our PV business outperformed the industry with a growth of one percent, fuelled by the good performance of our new-generation products. We are gearing up to introduce our much-awaited Harrier SUV on January 23.”

Honda Cars India, which is seeing strong demand for the new Amaze and CR-V reported a four per cent growth in sales in December 2018. The company despatched total of 13,139 units in December 2018 (December 2017:  12,642 units). In the first nine months of FY2019, it has cumulatively sold 1,34,797 units, which marks YoY growth of 3.7 percent April-December 2017: 1,29,964 units). Rajesh Goel, senior vice-president and director of sales, Honda Cars India, said, “The market continued to remain challenging in December. However, with lucrative year-end offers on many of our models and strong performance of new models l recorded a sales growth in December 2018.”

Toyota Kirloskar Motor posted a growth of 9.6 per cent in December 2018, as compared to the domestic sales in December 2017. The company sold a total of 11,830 units in the domestic market in December 2018 (December 2017: 10,793 units). In addition, the company exported 812 units of the Etios series. Commenting on the monthly sales, N Raja, deputy managing director, Toyota Kirloskar Motor, said, “We are happy to close the year end with a series of positive milestones despite the dampening effect on consumer sentiment owing to hike in fuel prices, higher interest rates, increase in insurance premium.”

“We have been able to record the highest ever sales in Innova and Fortuner this year. The buying sentiment had seen a slowdown in the last few months owing to adverse effects of macroeconomic factors, yet the industry hit back with a steady growth in sales. The Toyota Yaris sedan launched this year has been an important contributor to the positive annual sales growth. Additionally, other products like Etios Liva have also sustained the positive sales momentum,” he added.

Car manufactures across segments are looking to the New Year to jump-start sales.   There is a gaggle of new SUVs all set for launch soon, starting with the Tata Harrier on January 23 and the Mahindra XUV300 compact SUV in February. The carmakers are hopeful that 2019 gets off on a strong note. Considering the SUV market was notching nearly 20 percent growth a year ago, the 3.2 percent growth in April-November 2018 is a stark pointer that growth has moderated sharply.

Interestingly, the ongoing passenger vehicle sales slowdown is also the impacting sale of truck trailers that are used for the movement of these cars and SUVs across the country. Autocar

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