No festive cheer for auto sector; car sales down 5%

This is the first decline since June this year when car sales declined by 11%.

Festive season failed to bring cheers to automobile manufacturers as domestic passenger vehicle sales dropped marginally in October, the first decline in four months with companies resorting to inventory correction.

Passenger vehicle (PV) sales declined to 279,837 units in October from 280,677 units in the same month last year, according to the data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday.

Car sales were also down 5.32 per cent to 184,666 units last month as against 195,036 units in October last year.

This is also the first decline since June this year when car sales declined by 11.24 per cent.

"The festive season could have been a lot better but this is not necessarily a reflection of market sentiment. It is a temporary blip...The decline in sales is more to do with inventory correction by the manufacturers," SIAM director general Vishnu Mathur said in New Delhi.

From July to September there was inventory build-up by manufacturers at dealerships ahead of the festival purchases and in October they have reduced dispatches, he added.

The last drop in PV sales this year was in June when the dispatches declined by 11.21 per cent, Mathur said.

The decline was also reflected in the overall vehicle sales across categories, which stood at 21,62,164 units as against 22,01,489 units in October 2016, down 1.79 per cent.

This is the first decline since January this year.

In the passenger vehicle segment, Maruti Suzuki India posted a growth of 9.25 per cent at 1,35,413 units but that of Hyundai Motor India was down 0.86 per cent at 49,588 units.

Mahindra & Mahindra also posted a decline of 5.35 per cent at 23,413 units although domestic rival Tata Motors saw a growth of 3.22 per cent at 18,314 units in October this year.

Total two-wheeler sales also dropped in October by 2.76 per cent to 17,50,966 units compared to 18,00,668 units in the year-ago month.

This is the first decline in the segment since February this year.

Motorcycle sales last month also declined by 3.50 per cent to 11,04,498 units compared to 11,44,512 units in October 2016.

Market leader Hero MotoCorp posted domestic sales of 540,552 units as against 561,427 units in the year-ago month, down 3.72 per cent.

Rival Bajaj Auto saw its bike sales dropping marginally to 211,553 units as against 212,997 units in the same month last year. Honda Motorcycle and Scooter India (HMSI) also saw its sales dropping by 13.77 per cent to 144,431 units as against 167,496 units in October 2016.

In the scooters segment, total sales last month were at 571,431 units as against 568,410 units in October last year, down 0.53 per cent.

Segment leader HMSI posted sales of 293,117 units as against 302,862 units in the year-ago month, down 3.22 per cent, while Chennai-based TVS Motor Co had sales of 103,020 units as compared to 87,810 units in October 2016, a jump of 17.32 per cent.

Hero MotoCorp's scooter sales were at 80,535 units last month as against 88,790 units in October last year, down 9.3 per cent.

Sales of total commercial vehicles, however, rose by 6.44 per cent to 69,793 units in October, the SIAM said.

Photograph: Reuters