The Indian automobile industry continues to remain under stress in January ‘20 owing to persistent weak buying sentiments
The Indian
automobile industry has witnessed a worst ever slowdown in a decade - starting
in the second half of last fiscal year. The industry continues to remain in
negative zone across all segments stipulating weak buying sentiments among
consumers mostly on account of high cost of ownership. This is followed by
various regulatory changes from the government in a short span of time.
In January ‘20,
total vehicle dispatched domestically by the OEMs stood at 1.73 million units
compared to 2.01 million units same period last year recording a 13.8% y-o-y decline.
The medium & heavy commercial vehicle segment (M&HCVs) has witnessed
the worst decline of 34.6% y-o-y to 22,534 units dragging down the overall domestic
CV sales to 75,289 units registering a 14.0% y-o-y decline majorly affected by
slowdown in the economy of the country. In FY20 YTD, a total of 0.64 million
CVs has been dispatched registering a massive decline of ~20.3% y-o-y compared
to 0.81 million units in the same period last year.
Table: Auto whole sale numbers for the month of January 20 |
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Segments |
Jan-20 |
Jan-19 |
Dec-19 |
YoY (%) |
MoM (%) |
FY19YTD |
FY20YTD |
YoY (%) |
Commercial Vehicles (CVs) |
||||||||
M&HCVs |
22,534 |
34,456 |
21,388 |
-34.6 |
5.4 |
3,12,695 |
1,98,816 |
-36.4 |
LCVs |
52,755 |
53,135 |
45,234 |
-0.7 |
16.6 |
4,98,078 |
4,47,255 |
-10.2 |
Total |
75,289 |
87,591 |
66,622 |
-14.0 |
13.0 |
8,10,773 |
6,46,071 |
-20.3 |
Passenger Vehicles (PVs) |
||||||||
Passenger Cars (PCs) |
1,64,793 |
1,79,389 |
1,42,126 |
-8.1 |
15.9 |
18,69,228 |
14,56,031 |
-22.1 |
Utility Vehicles (UVs) |
84,929 |
82,772 |
85,252 |
2.6 |
-0.4 |
7,65,029 |
8,10,492 |
5.9 |
Vans |
12,992 |
17,964 |
8,408 |
-27.7 |
54.5 |
1,79,123 |
1,14,028 |
-36.3 |
Total |
2,62,714 |
2,80,125 |
2,35,786 |
-6.2 |
11.4 |
28,13,380 |
23,80,551 |
-15.4 |
2-Wheelers |
||||||||
Scooters |
4,16,573 |
4,97,169 |
3,06,550 |
-16.2 |
35.9 |
58,21,294 |
48,80,527 |
-16.2 |
Motorcycles |
8,71,886 |
10,27,810 |
6,97,819 |
-15.2 |
24.9 |
1,15,68,547 |
98,27,101 |
-15.1 |
Mopeds |
52,525 |
72,593 |
45,669 |
-27.6 |
15.0 |
7,34,516 |
5,48,330 |
-25.3 |
Total |
13,40,984 |
15,97,572 |
10,50,038 |
-16.1 |
27.7 |
1,81,24,357 |
1,52,55,958 |
-15.8 |
3-Wheelers |
60,903 |
54,043 |
53,297 |
12.7 |
14.3 |
5,74,856 |
5,67,659 |
-1.3 |
Grand Total |
17,39,890 |
20,19,331 |
14,05,743 |
-13.8 |
23.8 |
2,23,23,366 |
1,88,50,239 |
-15.6 |
Source: Industry outlook CMIE; Acuité Research |
The overall
domestic passenger vehicle dispatched stood at 0.26 million units in January ‘20
reflecting 6.2% y-o-y decline compared to previous year where passenger cars
and vans growth remain weak on back of weak demand. On the other hand, the
utility vehicle (UVs) segment continues to show positive momentum with a growth
of 2.6% y-o-y to 84,929 units compared to previous year majorly driven by new
launches in the segment. The 3W segment remained positive with a growth of 12.7%
y-o-y to 60,903 units compared to 54,043 units in the previous year. However, the
major setback was seen in the 2W segment where the total domestic sales declined
a massive 16.1% y-o-y to 1.34 million units compared to 1.59 million units in
the previous year. Both scooter and motorcycles segments saw a double digit
decline of 16.2% and 15.2% y-o-y respectively reflecting weak demand in both
rural and urban areas along with the ongoing stress in the industry.
Retail Sales: Primary Focus on BS IV Inventory Clearing
On the similar
note, retail sales has also been continuously declining for past 12 months
excluding August 2019, January ‘20 was no exception. Despite high discounts provided
by various dealers across the country to clear BSIV inventory before transition
to BSVI, the weak buying sentiments of consumers continues to haunt the retailers.
Table: Retail auto sales for the month of January 20 |
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Segments |
Jan-20 |
Jan-19 |
Dec-19 |
YoY (%) |
MoM (%) |
FY19YTD |
FY20YTD |
YoY (%) |
Commercial Vehicles (CVs) |
82,187 |
88,271 |
67,793 |
-6.9 |
21.2 |
6,54,404 |
5,56,374 |
-15.0 |
Passenger Vehicles (PVs) |
2,90,879 |
3,04,929 |
2,15,716 |
-4.6 |
34.8 |
22,29,253 |
21,41,842 |
-3.9 |
2-Wheelers |
12,67,366 |
13,89,951 |
12,64,169 |
-8.8 |
0.3 |
1,28,18,028 |
1,20,67,529 |
-5.9 |
3-Wheelers |
63,514 |
58,178 |
58,324 |
9.2 |
8.9 |
4,94,490 |
5,05,888 |
2.3 |
Grand Total |
17,03,946 |
18,41,329 |
16,06,002 |
-7.5 |
6.1 |
1,61,96,175 |
1,52,71,633 |
-5.7 |
Souce: FADA; Acuité Research Note: YTD sales excluding the month of August |
The retail sales
has witnessed decline in the starting month of the year across all segments
with an exception in 3- wheelers which saw a growth of 9.2% y-o-y to 63,514
units compared to same month previous year. However, overall retail sales saw a
decline of 7.5% y-o-y to 1.7 million units compared to 1.8 million units same
period last year. The commercial vehicle segment has witnessed a decline of
6.9% y-o-y to 82,187 units owing to slowdown in the overall economy of the
country leading to weak fleet movements affecting various fleet operators. The
passenger vehicle segment also saw a decline in retail sales of 4.6% y-o-y to 0.29
million units compared to 0.30 million units same period last year on account
of high cost of ownership. Furthermore, the major setback has been seen in the
2-wheeler segment witnessing a decline of 8.8% y-o-y to 1.2 million units
compared to 1.3 million units in January 19.
On the other hand, the push towards lowering down the inventory levels by OEMs and dealers, the retail sales in segments like passenger vehicles, commercial vehicles and 3-wheelers has witnessed growth compared to the units dispatched from OEMs. Commercial vehicles, passenger vehicle and 3-wheelers saw growth of 9.2%, 10.7% and 4.3% respectively compared to wholesales excluding 2-wheeler segment which saw a decline of 5.5%. Also, the impact can be witnessed in the inventory levels which has dropped to 15-20 days in PV segment and 25-30 days in 2-wheeler, 3-wheeler and commercial vehicle segments respectively.
Table: Comparison in sales for the month of January 20 |
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Segments |
Retail |
Wholesale |
% Growth |
Commercial Vehicles (CVs) |
82,187 |
75,289 |
9.2 |
Passenger Vehicles (PVs) |
2,90,879 |
2,62,714 |
10.7 |
2-Wheelers |
12,67,366 |
13,40,984 |
(5.5) |
3-Wheelers |
63,514 |
60,903 |
4.3 |
Grand Total |
17,03,946 |
17,39,890 |
(2.1) |
Source: Acuité Research |
Going forward,
the overall domestic automobile industry is expected to witness a double digit
decline for the first time in last fifteen years in FY20 across all segments. Acuité
believes that the Indian automobile industry will continue to remain under
stress till the first half of next financial year given the high cost of
ownership for consumers due to hike in vehicle prices across various segments
by OEMs with respect to BS-VI transition, safety norms and subdued economic
growth of the country.