Veejay Ram Nakra, chief of sales and marketing (automotive division) at Mahindra & Mahindra, said retail across industry was slow last month, especially passenger vehicles. “We believe this temporary phenomenon is largely confined to May. We expect a good monsoon will shore up demand,” said Nakra. Manufacturers in India report only wholesale numbers (sales made to dealerships).
There is no organised data on retail sales. However, a Maruti Suzuki dealer in the Capital with multiple outlets said retail demand has been low by 8-10 per cent, compared to last year. Maruti Suzuki is expected to announce a price hike soon.
Industry officials and dealers said inventory is beginning to climb. Discounts and promotions have started inching up. Tata Motors said on Friday that May was a ‘challenging month’ and retail had hit the brakes. It did not elaborate on the reasons behind the slow-moving retail.
Anurag Mehrotra, president and managing director at Ford India said even as the outlook is positive at the macroeconomic level, industry needs to exercise caution, given the rising commodity and fuel prices that are expected to trigger inflation.
Industry sold 3.28 million units of passenger vehicles during 2017-18, with a YoY growth of almost 8 per cent. At the start of 2018-19, industry body Society of Indian Automobile
Manufacturers had projected growth to be in high single digits in 2018-19. Leading banks such as State Bank of India, ICICI, and HDFC raised lending rates by up to 20 basis points (bps) on Friday, making home as well as car loans
expensive. The twin impact of higher fuel prices and rising interest rates may lower growth pace for carmakers.
“More than the rate of car loans, if banks increase home loan rates by 10 bps or more, the higher equated monthly instalment on home loan reduces disposable incomes. Monsoon is the only calming factor that will keep rural demand active during the second half of the year,” N Raja, deputy managing director at Toyota Kirloskar Motor, said in a recent interaction. Raja added that the annual salary increases in the information technology industry this year was lower and factors like these impact market sentiments.