Indian automobile sector continues to perform poorly as is evident from April volume numbers reported by automobile majors. The subdued demand is on the back of multiple challenges due to increase in the total cost of ownership (on mandatory long-term insurance and implementation of safety regulations), higher cost of retail finance and moderate economic activity ahead of general elections.
Commercial vehicle (CV) segment sales were muted for players in this space. The environment continues to be challenging for companies in this segment. Factors such as non-availability of retail finance, lagged impact of new axle load norms and slowdown in economic activity ahead of elections have impacted demand. Tractor segment also continues to remain weak on the back of higher base of last year and subdued farm sentiment.
Three-wheeler (3W) sales were mixed on the back of very high base for last year. Two-wheeler (2W) volumes continues to be weak due to subdued consumer sentiment led by higher cost of ownership, high base of last year and adverse macro factors.
Company-wise, Tata Motors registered a year-on-year (YoY) decline of 18 percent in CV volumes, led by 26.6 percent dip in the medium and heavy commercial vehicle (M&HCV) volumes.
Eicher Volvo also witnessed flat growth. Mahindra & Mahindra (M&M) saw a nine percent volume decline in April, primarily due to a significant dip in M&HCV segment volumes. Ashok Leyland, however, bucked the trend with a growth of seven percent driven by the light commercial vehicle (LCV) segment.
No sign of a recovery in the passenger car segment
Segment leader, Maruti Suzuki posted a 19 percent dip in April volumes. The management expects demand to remain muted in H1, recover in H2 and grow by four-to-five percent in FY20.
Tata Motors’ PV segment witnessed a 26.3 percent YoY decline. The management is expecting strong months ahead as its new SUV Tata Harrier has been receiving good traction. M&M posted an 8.9 percent dip in its monthly volumes.
Two-wheeler segment: Inventory at an alarming level
Mixed showing by three-wheelers
Lower Rabi season impacted tractor demand
Positive sentiment on the export frontExports seem to be faring well as is evident from the monthly volume numbers. Barring M&M and Tata Motors, auto majors have posted strong export growth in April. Tata Motors’ management said the decline was due to new regulations and political uncertainty in Sri Lanka and slump in Middle East, affecting overall industry volumes in these markets.
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