Auto sales pick up in June

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SME Times News Bureau | 02 Jul, 2020
India's major automobile players reported a sequential uptrend in June, as the rate of sales de-growth decelerated.

Accordingly, two-wheelers and tractors off-take on a sequential basis in June showed narrowing of the de-growth rate.

However, analysts said that the industry is still reeling under the impact of the Covid-19 outbreak.

On a company specific basis, automobile major Maruti Suzuki reported a year-on-year decline of 54 per cent in total sales in June 2020. The company's total off-take declined to 57,428 units from 1,24,708 units sold in June 2019.

The total sales included 52,300 units off-take in the domestic market and of 839 units to other OEMs. Exports during the period under review fell to 4,289 units from 9,847 units shipped out in June 2019.

Another automobile major, Hyundai Motor India, reported cumulative sales of 26,820 units in June 2020, of which, domestic sales accounted for 21,320 units and exports another 5,500 units.

Mahindra & Mahindra reported a decline of 55 per cent in its total vehicle sales in June 2020. The company's total sales declined to 19,358 units from 42,547 units sold during the like period of the previous year.

Commenting on the sales performance, Veejay Nakra, Chief Executive Officer, Automotive Division, M&M, said: "The automotive industry has started t o see recovery both in the passenger and small commercial vehicle segments. T his has been led primarily by rising rural demand and movement of essential goods across the country."

Similarly, Tata Motors reported a downfall in total sales for Q1FY21 to 25,047 vehicles, compared to 1,37,545 units sold during Q1FY20.

The company's total domestic sales for Q1FY21 plunged by 82 per cent to 23,845 units from the 1,31,879 units sold during the corresponding period of the previous fiscal.

"As of June 30, 2020, the Company has cash and cash equivalents of more than Rs 5,000 crore and undrawn committed facilities of Rs 1,500 crore," the company said in a statement.

In the two-wheeler space, Hero MotoCorp reported four times wholesale growth on a sequential basis in June.

The company's wholesale deliveries made to dealerships during the mo nth under review sequentially grew to over 450,744 units from the 112,682 units dispatched in May 2020.

Furthermore, two-wheeler major Honda Motorcycle & Scooter India reported a sequential increase of 156 per cent in retail sales for June.

Honda's retails jumped 156 per cent to nearly 3 lakh units in June 2020 from 1.15 lakh units in May.

The company said the second month of return of economic activity saw Honda's total two-wheeler dispatches shoot up nearly 4 times to 210,879 units in June compared to 54,820 units in May.

"While normalcy is yet to return to the industry, there have been signs of hope with sales volumes increasing by almost 2 to 3 times as compared to May. But this is still below the June 2019 volume by 49 per cent for PVs," said Sridhar V, Partner, Grant Thornton India LLP.

"Predominantly, these have come from the non-metros since the large metros have been under lockdown with not many dealership networks functioning. The plant capacity utilisation has also been less with its woes of material and labour supplies," he added.

According to Shamsher Dewan, VP and Sector Head, ICRA: "The initial set of data released by the automobile companies show an encouraging trend in sales in June 2020 over the prior month. Limited data released by the two-wheeler OEMs and tractor OEMs indicate healthy ramp up in sales supported by healthy demand from rural and semi-urban markets.

"On the other hand, heavy commercial vehicles will continue to report weak sales trends in the near-term and will only see a gradual recovery."

Suman Chowdhury, Chief Analytical Officer at Acuite Rating s & Research, said: "Acuite believes that the current sales of two and four-wheelers are also partly driven by the lack of availability of public transportation system and the perceived contagion risks in most of the large cities."