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Last updated: 03 Aug, 2020  

Car.9.thmb.jpg Need for personal mobility pushes auto sales

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SME Times News Bureau | 03 Aug, 2020

The increasing need for personal mobility due to the Covid-19 pandemic along with healthy rural demand accelerated the sales momentum of automobile industry in the month of July.

Accordingly, on sequential basis, major automobile manufacturers reported healthy sales figures in July when compared to June.

Besides, most of them were able to narrow the downslide in sales on a year-on-year basis as well.

On Saturday, automobile major Maruti Suzuki reported a marginal year-on-year decline of 1.1 per cent in total sales during July 2020. The company's total off-take declined to 108,064 units from 109,264 units sold in July 2019.

"Maruti Suzuki India Limited posted total sales of 108,064 units in July 2020. This is a growth of 88.2 per cent over June 2020 and a fall of 1.1 per cent over July 2019," Maruti Suzuki said in a statement.

"This includes domestic sales of 100,000 units and 1,307 units for other OEMs in the domestic market. In addition, the company exported 6,757 units in July 2020."

Similarly, Hyundai Motor India reported that its last month's domestic sales reached 98 per cent of July 2019 volume. The domestic sales accounted for 38,200 units and export another 3,100 units.

"With the changing trend of preference for personal mobility, our consistent efforts are towards fulfilling the customer needs and meeting the market demand," said Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India.

Another auto major, Mahindra and Mahindra reported a 36 per cent fall in its total sales during July, on a year-on-year basis. In a regulatory filing, the company said that it sold 25,678 units, including exports, last month, compared to 40,142 vehicles sold during the same period last year.

"It is encouraging to see that the enquiry and booking levels in July are significantly higher compared to June, both for 'Utility Vehicles and Small Commercial Vehicles'. As we ramp up production, the biggest challenge is on the supply side and working around these challenges is our top priority."

On its part, Toyota Kirloskar Motor reported a 40 per cent growth in wholesales in the month of July compared to June 2020. Accordingly, the company sold a total of 5,386 units in July 2020, from an off-take of 3,866 units in the first month post unlock in June.

"Performance in July is certainly an indication of economy springing up to life and the rural and semi urban demand has supported this progress," said Sridhar V, Partner, Grant Thornton India LLP.

"New launches have also helped the big guys in showing this jump in demand."

Besides, two and three-wheeler manufacturer TVS Motor Company reported a sequential sales growth of 27 per cent in July 2020. The company sold 252,744 units as against 198,387 units in June 2020.

Furthermore, two-wheeler major Hero MotoCorp reported a marginal fall in its total sales including exports for the month of July. Hero MotoCorp sold 514,509 units of motorcycles and scooters in July 2020 from an off-take of 535,810 units in the corresponding period of last year.

In addition, Honda Motorcycle & Scooter India's domestic dispatch was higher by 53 per cent in July on a sequential basis to 3,09,332 two-wheelers.

"In line with expectations, two wheeler sales in July 2020 continued to improve on sequential basis and are now inching towards previous year levels. Healthy demand from rural and semi-urban markets continued to support the momentum, helping offset the weak demand trends in urban markets," ICRA's Vice President and Sector Head - Corporate Ratings Shamsher Dewan said.

"Going forward, the pace of recovery will clearly hinge on stabilisation of the operating environment, which remains uncertain due to the rising pace of infections and partial lockdowns. Supply chain disruptions is another area of concern."

According to Suman Chowdhury, Chief Analytical Officer at Acuite Ratings and Research: "While the growth figures are partly a play of the base effect, there is a significant undercurrent of recovery in the domestic automobile sector driven by the increased need for personal mobility, particularly given the increased risk as well as the continuing unavailability of public transportation mechanisms in the wake of Covid-19."

"We believe that a healthy growth in the agricultural sector where the impact of the pandemic has been hitherto limited has also led to better demand accruing from the semi-urban and the rural areas. This should also get reflected in the two-wheeler and the tractor volumes of July 2020."

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