Passenger vehicle (PV) sales in India have been lackluster in the past few months as customers have delayed purchases in the backdrop of a rise in oil prices and higher interest rates, while a liquidity crunch faced by some non-banking finance companies has also hurt. A rise in vehicle prices, in the wake of the Supreme Court ruling that increased third-party cover from one year to five years, has also weighed.
Leading utility vehicle maker Mahindra & Mahindra has now scaled down industry growth forecasts for the year-ending March 2019 and now sees only around 7-8 per cent growth, versus double-digit PV market growth it had expected earlier.
“Till last quarter, I had said we should see a double-digit growth for the first time in many years in passenger vehicles. Looking at what has happened in the quarter and how the festive season has gone, I would think that it would be difficult to get to double digit growth in the PV segment. I would expect to end up at maybe 7 per cent to 8 per cent,” said Pawan Goenka, managing director of M&M.
According to data released by Society of Indian Automobile Manufacturers, PV sales in October were up marginally for the first time in four months. Total PV sales last month were at 284,224 units, versus 279,877 a year ago.
Despite ongoing promotions by various car makers, few new launches have also led to a some what low-key festive season this year.
“My understanding is that festive season has been overall better than last year, but not as big as we were expecting. It is not subdued, it is moderated from the expectation view point. The sentiment is more affecting PVs than everything else. The factor of oil prices being high, perhaps played on people's minds when deciding to buy a new car,” said Goenka.
M&M has also seen some impact on tractor sales. In the July-September quarter, M&M's tractor sales had declined 5 per cent year-on-year to 73,012 units from 76,984 units, which the company attributed to the shift in festive season from the second quarter to the third.
“Growth has been very good in the festive season. But, I would say, perhaps, little bit less than what we may have expected in terms of the overall buoyancy of the growth. So, I would think Q3 will end up at roughly where we had expected, maybe slightly lower. Therefore, our overall projection for the industry, which I had said last time 12-14 per cent with a bias towards 14 per cent, I would still say 12-14 per cent, but with a bias now towards 12 per cent,” said Goenka.
M&M's standalone net profit for the second quarter rose 24 per cent from year ago to Rs 1,649 crore, while revenue gained 7 per cent to Rs 12,989 crore.
The company has received good response for its Marazzo SUV that was launched last month; officials stated that currently it has orders for around 13,000 units.
