Impending GST Rollout Impacts Vehicle Sales in June

With manufacturers and dealers rationalizing their inventories and customers postponing their purchases due to expected reduction in vehicle prices post GST implementation, the vehicle sales were in slow lane during June 2017. Discounts and freebies offered by the OEMs and dealers to clear their stocks during June, did not find many takers. Total vehicle sales in June 2017 at 1,818,829 units were flat, crawling up by measly 1.3% vis-à-vis 1,796,172 units a year ago.

Expectation of reduced prices post-GST rollout puts brakes on passenger vehicle sales.

Passenger vehicle segment that had been witnessing a steady growth for some time hit a roadblock, as customers preferred to wait and watch to see how prices play out on introduction of GST. Even the UV sales that were clocking healthy double-digit growth riding on compact SUVs introduced in the market of late, were down 11.3% y-o-y in June 2017. Passenger cars and vans saw their domestic sales decline year-on-year by 11.2% and 10.7%, respectively. Total passenger vehicle sales in domestic market at 198,399 units in June 2017, compared to 223,454 units a year ago, posted a 11.2% decline, making it the  steepest fall since May 2013, when due to the economic slowdown and rising fuel prices, overall PV numbers were down by 11.24%.

Thanks to the continuing significant contribution of Vitara Brezza in compact SUV segment and Baleno in compact segment to its sales tally, the car market leader, Maruti Suzuki India (MSI) managed a marginal 1.0% uptick in domestic sales that stood at 93,057 units in June 2017 vis-à-vis 92,133 units in June 2016.

Hyundai Motor India Ltd (HMIL), No. 2 player in the Indian passenger vehicle market, registered a 5.6% drop in domestic sales from 39,806 units in June last year to 37,562 units in June 2017. HMIL’s exports also slid by 16.4% y-o-y to 13,291 units during the month.

“In a challenging market fueled with speculations on the GST structure, Hyundai registered highest ever half year (H1: Jan –June 2017) domestic sales at 2,53,428 units with a growth of 4.1% on account of strong acceptance of super performer brands Grand i10, Elite i20 and Creta in Pre-GST business environment. We expect a positive demand pull post the successful implementation of GST in the coming months, as industry will witness heightened level of customers’ interest in a seamless unified single market,” commented Rakesh Srivastava, Director - Sales & Mktg, HMIL.

Honda Cars India Ltd (HCIL) posted domestic sales of 12,804 units in June 2017 against 11,407 units in corresponding month last year, registering a growth of 12.2%. Honda City clocking 5,187 units in domestic sales was the company’s best-seller in June 2017, followed by WR-V – 4,243 units, Jazz - 1,307 units, Amaze - 1,193 units, BR-V – 567 units, Brio – 283 units, and CR-V – 24 units. HCIL also exported a total of 450 units in June 2017.

Yoichiro Ueno, President and CEO, HCIL, said “HCIL conducted a price protection in June to those customers who purchased cars before GST rollout in order to counter the sales challenge during pre-GST period. It helped us maintain good sales numbers. We foresee that the GST rollout, good monsoon forecast and upcoming festive season will further improve the buyers’ sentiment. The 4th Gen Honda City reached yet another milestone in its successful journey in India, recording cumulative sales of over 2.5 lakh units in June 2017. City also became the highest selling mid-size sedan in H1 of 2017.”

Tata Motors’ passenger vehicle sales, including cars, UVs and vans, in domestic market at 13,148 units during June 2017 were down 12.2%, vis-a-vis 14,973 units in June last year. The company called it as a blip, saying that the sales would recover in the coming months, post-GST.

Another home-grown player, Mahindra & Mahindra (M&M) was also in negative terrain, reporting a 5.3% fall in its domestic passenger vehicle sales that added up to 16,169 units in June 2017, as against 17,068 units a year earlier.

With the aim of reducing inventories at its dealerships before GST rollout, Toyota Kirloskar Motor (TKM) withheld supplies to dealers. The company sold just 1,973 units in the domestic market and exported 1,655 units of the Etios series in June 2017, clocking a total of 3,628 units. The domestic sales witnessed a massive 85.5% plunge, while the exports were up 24.9% y-o-y.

N Raja, Director & Sr VP, Sales & Mktg, TKM said, “In line with our “Customer First” philosophy, Toyota Kirloskar Motor has taken a conscious decision to lower the volumes of vehicles sold to dealers this month. We believe that our dealers are our first customers, who cater to the requirements of our end customers. This strategy has been undertaken to ensure that there is minimum burden on our dealer partners and they can focus on clearing the existing stocks at the dealerships.”

Similarly, Ford India also took a massive 35.1% hit in domestic sales, logging 6,148 units in June 2017 vis-à-vis 9,469 units in June 2016. With exports of 14,679 units in June, the company remained in fast lane, posting a healthy growth of 42.7%.
Renault India posted domestic sales of 6,840 units in June 2017, which translated into a negative growth of 42.2%, compared to 11,837 units a year ago.

Ditto for Nissan India that witnessed a 12.1% decrease in domestic sales at 4,582 units in June 2017 vis-à-vis 5,212 units a year ago. The company’s exports were also down 50.9% y-o-y to 3,751 units during the month.

Two-Wheelers hold steady

Bucking the uncertainty arising from GST implementation, two-wheeler sales stayed on course. Total two-wheeler sales at 1,527,049 units in June 2017 (June 2016: 1,468,363 units) grew by modest 4.0%.

Hero MotoCorp Ltd (HMCL) came up with a stellar performance, standing out as the biggest volume gainer in June 2017. The company reported total sales (including exports) of 624,185 units June 2017, up 13.6% (June 2016: 549,533 units). Hero registered robust growth on the back of solid performances by both – scooters and motorcycles. While the domestic sales of motorcycles at 537,187 units (June 2016: 477,540 units) increased by 12.5%, those of scooters posted a 24.7% growth to 75,482 units in June 2017.

Honda Motorcycle & Scooter India (HMSI) witnessed domestic sales of 416,365 units in June 2017, growing by a paltry 2.1% (June 2016: 407,979 units). The company’s domestic scooter sales volume at 271,007 units grew by 2.1% from 265,361 units in June 2016. The domestic sales of motorcycles at 145,358 units inched up by 1.9% y-o-y. Honda 2-wheeler  exports jumped by 46.4% to 28,163 units in June 2017 from 19,243 units in the same month a year ago.

Y S Guleria, Sr VP - Sales & Mktg, HMSI, said, “In June 2017, customers preferred to buy Honda 2Wheelers even though many in the industry offered pre-GST discounts. Starting July 1, Honda is passing on the GST benefit applicable in most of the States to our valued customers who now get significant savings going up to Rs. 5,500 depending on the model and the state of purchase.”

TVS Motor clocked domestic sales of 228,518 units in June 2017, up 10.4% (June 2016: 207,012 units). Its scooter sales grew by 34.0% y-o-y to 86,296 units during the month. Notably, the growth in TVS scooter sales was driven by its bestselling 110cc Jupiter scooter, which is also India’s second largest selling scooter model. TVS’ motorcycle sales in domestic market were up 13.4% to 76,920 units in June 2017 over 67,859 units in June 2016, while domestic moped sales at 65,302 units were down 12.6% y-o-y.

Bajaj Auto sold 108,109 units in the Indian market in June 2017, as against 168,625 units sold in June 2016, which marked a sharp 35.9% decline. The company’s two-wheeler exports were also down 7.8% y-o-y to 96,558 units during the month.

Domestic sales of India Yamaha Motors slipped by 10.0% to 60,472 units in June 2017 from 67,204 units a year back. The company, however, clocked an impressive 30.5% growth in two-wheeler exports that added up to 15,221 units in June 2017 vis-à-vis 11,663 units in June 2016.

Suzuki Motorcycle India registered domestic sales of 33,565 units in June 2017, witnessing a spectacular 58.5% surge compared to 21,172 units a year ago.

Unstoppable, Royal Enfield continued to grow at scorching pace. Selling 61,671 units in the Indian market during June 2017, the company posted a decent 25.7% growth over the corresponding sales tally of 49,060 units in June 2016.

Commercial Vehicles continue to face headwinds

Commercial vehicle sales in the Indian market remained in low gear. While M&HCVs were in negative terrain, posting a 6.5% dip in domestic sales, LCVs managed to stay in positive territory with domestic sales numbers posting a modest 6.9% uptick.

The market leader, Tata Motors registered a flat growth in domestic CV sales that numbered 23,706 units in June 2017, as against 23,700 units a year ago.

Ashok Leyland was on course, clocking domestic sales tally of 10,980 units in June 2017, which marked a 5.0% growth over 10,455 units in June 2016.

VECVs registered domestic sales of 3,382 units of Eicher branded CVs in June 2017 - lower by 20.5% y-o-y.

Domestic sales of Mahindra commercial vehicles rose by 11.8% to 15,132 units in June 2017 from 13,540 units a year earlier.

With monsoons living up to the forecast and the dust generated by GST settling down gradually, the vehicle sales are expected to pick up in the coming months.




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