After festive cheer, passenger vehicle sales hit the slow lane in November

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Sales of passenger vehicles resumed their declining trend in November after a blip in the preceding month, indicating automakers are yet to recover from the worst auto slowdown in India in more than a decade. 

Domestic passenger vehicle sales fell 0.84 per cent year-on-year (YoY) to 264,000 units in November, according to the data released by Society of Indian Automobile Manufacturers. 

While car sales were down 11 per cent over last year to 160,000 units, utility vehicle sales rose 32.7 per cent to 92,739 units.

Shares of eight auto companies fell 0.3 per cent to 1.06 per cent after Siam unveiled the auto sales data for November 2019. TVS Motor Company (down 1.06 per cent), Hero MotoCorp (down 1.04 per cent), Ashok Leyland (down 1.03 per cent), Maruti Suzuki India (down 0.87 per cent), Escorts (down 0.86 per cent), Mahindra & Mahindra (down 0.71 per cent), Tata Motors (down 0.59 per cent), and Bajaj Auto (down 0.3 per cent) hit the skids. Eicher Motors was up 0.1 per cent.

“The way the industry responded showed there is some recovery, but it is too early to say if the worst is behind us,” Rajesh Menon, director general of Siam, said. Commercial vehicles and two-wheelers, he said, continue to be a concern for the industry. Sales have been slipping since July last year, leading to automakers paring production. While the original equipment manufacturers (OEMs) have not yet resorted to job cuts, the ancillary companies have been forced to lay off workers as orders dry up from OEMs.

The passenger vehicle segment, with overall sales of 279,382 units, is down 0.84 per cent YoY. Two-wheelers recorded a decline of 14.27 per cent in sales; 1.41 million units were sold in November, compared to 1.64 million units last year. Menon cited poor consumption in rural areas as the reason for the dip in sales growth of two-wheelers.

Commercial and passenger vehicles recorded a decline of 14.98 per cent and 10.83 per cent, respectively, this year in November, compared to last year’s figures. Declaring the monthly sales number, executives had said the reason for the decline is that growth in October was due to festive demand. 

“After an encouraging festival period in November, the industry declined sharply. In addition, the industry is also preparing for the BS-VI transition. In line with our strategy to focus on retail, we have further enhanced our network coverage,” Mayank Pareek, president, passenger vehicles business Unit at Tata Motors, said.

 However, there has been a spike of 4.45 per cent in the sale of three-wheelers; 55,778 units of three-wheelers were sold this year, compared to 53,401 units sold in November 2018. “If income-tax relief is announced in the Budget, it will be of great help. There is a need to reduce the goods and services tax too,” said Menon.

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