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Delay in monsoon adds to auto industry's woes; smaller players outperform

Despite strong headwinds, the smaller players continued to gain market share in the PV and two-wheeler segment in June 2019.
Aug 1, 2019 / 01:14 PM IST

Grappling with regulatory and policy issues, tepid demand, a slowing economy and a consolidated second-hand market, the Indian auto sector has now been hit by a delay in monsoon, worsening the sentiment, India Ratings and Research agency has said.

The Indian automobile industry, which is passing through one of its worst slumps, saw domestic sales drop by fell 12 percent year on year in June 2019, while passenger vehicle (PV) sales declined 18 percent.

Smaller players, however, manged to dodge the the headwinds, expanding market share in the PV and two-wheeler segment in the June quarter . Hyundai Motor India gained 6 percent YoY led by strong sales of the new variant of its flagship model Creta.

Maruti Suzuki gained about 1 percent YTD (year-to-date) on a relatively lower decline in sales volume as compared with industry peers.

In the two-wheeler segment, TVS gained 1 percent market share on robust sales of scooter model NTorq, while Suzuki benefitted from an increase in the sales of its Access model. Pulsar and Platina models helped Bajaj Auto gain 2 percent market share YoY.


In the June edition of its credit news digest on Indian auto sector, the rating agency said that original equipment manufacturers continued to take production cuts amid mounting inventory at the dealership level.

"Over April-June 2019, the auto industry undertook a production cut of 11 percent YoY on account of around 12 percent YoY, 14 percent YoY and 10 percent YoY production cut in PV, commercial vehicle (CV) and two-wheeler segments, respectively," the report said.


Auto major Maruti Suzuki cut production by 15 percent YoY . But, the company emerged as the top gainer in the CV and two-wheeler segment on the back of robust sales of Super Carry LCV and Access variants.

The average inventory for PVs declined to 30-35 days in June from 35-40 days in May. Hyundai Motor India, was an outlier, as it  increased production by 3 percent.

In the commercial vehicle segment, industry leaders Tata Motors and Mahindra & Mahindra (M&M) cut production by 12 percent and 25 percent, respectively, due to large inventory. M& M, however, reported a 4 percent YoY growth in the PV segment on the back of an increase in utility vehicles sales.

The average inventory for CVs increased to 55-60 days in June from 45-50 days in May .

Production cuts were also reported in the two-wheeler segment .

Hero MotoCorp cut production by 11 percent, Honda Motorcycle was steeper at 23 percent. Inventory at dealer level increased to 60-65 days in June, up from 55-60 days in the previous month, the report said .

The Federation of Automobile Dealers Associations requested the auto industry to bring down the dealer inventory to 21 days by September, the  report said. So , production cuts would have likely continued in July, it said.

Suyash Maheshwari
first published: Aug 1, 2019 01:14 pm