Automobile companies, including top car maker Maruti Suzuki and sports utility vehicle giant Mahindra & Mahindra, among others, reported sluggish sales growth in December 2018 as customer demand remained slow despite the year-end discounts.
Most car makers offer sizeable discounts in the month of December to clear the existing market inventory, before new model year stocks are dispatched. Despite this, Maruti Suzuki India's total sales last month slipped 1.3 per cent to 128,338 units, versus 130,066 units a year ago. Domestic sales for the maker of the Swift hatchback rose 1.8 per cent to 121,479 units, versus 119,286 units; exports on the other hand tumbled 36.4 per cent to 6,859 units from 10,780 units.
The biggest downfall was in the entry-level mini segment, which includes the Alto and Wagon R, where sales were down 14 per cent, while compact segment (Swift, Baleno, Dzire etc) fell 3.8 per cent.
Maruti was not the only firm to be hurt by weak consumer demand. Homegrown Tata Motors, which is set to launch the much anticipated Harrier SUV later this month, saw its total domestic sales, including those of passenger as well as commercial vehicles (CV), slip 8 per cent in December to 50,440 units from 54,627 units a year earlier.
"December 2018 was a challenging month for the (PV) industry with muted consumer sentiments," the company said, adding that liquidity crisis and higher interest rates among other things had impacted CV sales.
While, Tata Motors' domestic CV sales declined 11 per cent to 36,180 units, its PV sales were 1 per cent higher year-on-year at 14,260 units.
M&M, meanwhile, said its total domestic sales last month de-grew 1 per cent to 36,690 units from 36,979 units a year ago. Exports, on the other hand jumped 38 per cent to 3,065 units from 2,221 units. In the domestic market, M&M's PV sales fell 3 per cent and utility vehicles declined 4 per cent. CV sales were also down 4 per cent. However, sales of vans and cars, which includes sales at its electric vehicle unit, rose 17 per cent to 1,200 units.
"In domestic market, challenges relating to tight liquidity and low buying sentiment continue the de-growth for December," said Rajan Wadhera, president, automotive sector, M&M.
Bucking the trend, Toyota Kirloskar said its domestic sales in December rose 10 per cent year-on-year to 11,830 units, from 10,793 units. Its exports, though, fell to 653 units from 812 units, a year ago. The Yaris sedan, launched in 2018, was an important contributor to its annual sales growth, Toyota said.
Traction for the new Santro also powered country's second largest car maker Hyundai's sales in December, which were up 4.6 per cent to 42,093 units, versus 40,158 units in the same month a year ago.
"The festive season performance was hit by factors such as increasing cost of ownership, postponement of purchases during elections, lower volume in the state of Kerala and selective financing by non-banking finance companies. Our channel checks indicate expectations for a gradual improvement in volume performance after a muted festive season, driven by triggers such as new products, pick-up in Kerala volumes, continuing rural demand, and fall in fuel prices," Raghunandhan N.L. of Emkay Global Financial Services said in a report last week.
The analyst is expecting a 5 per cent PV volume growth in the current year, ending March 2019, which should recover to 9 per cent over financial years 2019-2021.
