Car-makers expect sales to rebound in Q4 amid cautious outlook

Passenger vehicle makers are hopeful of reversing the muted trend in the December quarter vehicle sales as conditions turn favourable. But, industry analysts are cautious of the Q4 growth outlook.

While final numbers of PV industry for December and the third quarter are awaited, an analysis on the volumes of leading players such as Maruti, Hyundai, Tata, Mahindra, Honda and Ford indicated that industry volumes for Q3 are likely to be flat or marginally up when compared to the same period a year ago.

Poor sentiments

PV industry reported a decline of about four per cent in sales during the September quarter after recording a strong growth of 20 per cent in the first quarter of this fiscal.

Car-makers were confident of a reversal during the December quarter starting with festival season boost to sales. But the sales were not on the expected lines due to poor buyer sentiments on account of multiple factors such as higher fuel prices, liquidity crunch and higher insurance cost-related issues. October month fared better, but only to register a three per cent dip in sales the next month at 2.66 lakh units.

Bullish factors

However, the industry has started off the year with some optimism as the fuel prices have seen a significant drop now. Also, inventory correction appears to be complete for leading players. They expect the liquidity issues to ease in the coming weeks. Hence, the industry expects a rebound in sales in Q4.

Top car-maker Maruti is confident of a better performance in this quarter. “Inventories are moving to the lowest levels (its factory is also closed for a week now). Therefore, sales will again go up to rebuild the inventory and we will achieve a decent growth,” said a spokesperson of Maruti Suzuki India.

The current quarter will also see some new launches and that is expected to ignite the excitement in the market.

“We definitely see good buoyancy coming in the March quarter. Usually, the first quarter of the calendar year will be better. The favourable factors, as of now, include lower stock with dealers, new year models and proposed new launches which will create some excitement in the market,” said Puneet Anand, Senior General Manager & Group Head, Marketing, Hyundai Motor India Ltd. With its SUV Harrier launch scheduled for early 2019 and a robust demand for some of its existing cars, Tata Motors expects to drive stronger volumes in Q4 of this financial year.

Slack rural demand

Meanwhile, Subrata Ray, Group Vice President-Corporate Ratings, ICRA, cautions that the growth in the PV segment could remain muted in mid-single digit for the March quarter. “While fuel prices have eased, consumer sentiments continue to remain cautious which weigh on the demand. The rural segment, which was driving industry volume growth in recent quarters, is showing signs of moderation. Key States like Karnataka, Maharashtra and Gujarat are facing drought, which will also impact rural demand,” he notes.

Since 2019 being a general election year, will it spur some demand for cars? Ray says that the historical trend in 2009 and 2014 suggest that PV demand growth during the run-up to the general election has generally remained soft.

“Any meaningful recovery in demand is only anticipated post the outcome. A stable government at the Centre will be positive for the overall economy as well as for PV industry,” he adds.

Our Delhi Bureau adds: German luxury car-maker BMW on Thursday said it has sold 11,105 cars (BMW + Mini) in 2018 in India, up 13 per cent as compared with 9,800 units in 2017.

BMW Group India achieved highest ever sales of 10,405 units clocking a 11 per cent growth as compared with 9,379 units in 2017. “Mini India accelerated with unprecedented growth of 66 per cent with 700 units, further strengthening its position in the small-premium car segment,” the company said.

BMW also saw significant contribution of up to 50 per cent coming from the locally-produced Sports Activity Vehicle (SAV) range with strong contribution from the new BMW X3, it said.

“By selling 2,187 motorcycles in the first full year of operations, BMW Motorrad India has successfully created an intense demand for the ultimate riding machine,” the company added.