Following a festive season when there wasn’t much to write home about, December 2018 sales hasn’t been particularly gainful for the Indian auto industry. While end of the year is all about calculated moves since manufacturers always announce a price hike with the start of every new year, end of year discounts is a dependable tool at the dealership level to clear stock in preparation for new stock in the new year.
End of year stock liquidation isn’t the most profitable period as discounts shave off profit margins for dealers. However, despite attractive deals, and substantial discounts sales performance has remained muted with even the biggest manufacturers (by volume) posting stagnant/muted performance.
Deferred purchase decisions are tantamount to muted markets. In recent months, there’s been little to cheer about. Fuel price hikes have been a bummer. It’s not just the thought of fuel expenses that’s bothersome but with transportation costs increasing, the market in general seems pricey as increased transportation costs are factored into daily purchases made by consumers.
Of course fuel prices have dropped, but consumer sentiment doesn’t change overnight. Changes in interest rate directly impact car loan rates causing potential customers to defer car buying decisions. Below is the sales report of all major car makers in India.
Weakening of Indian Rupee is self explanatory. In simple terms, you lose bargaining power. Of course rupee rates change constantly and is result of current and historic factors, but they do create an environment of uncertainty since purchase decisions related to manufacturing are affected too. Stock market volatility causes substantial amounts of money to change hands each day, and keeps buyers at bay.
For the three companies listed in the dometsic stock market, Tata and Maruti Suzuki, have registered 1 percent growth in December 2018, and Mahindra 1 percent sales decline. Hyundai, Honda, Toyota and Ford listed here in order of volumes sold last month posted sales increase of 5, 4, 10, and 15 percent, respectively, in sales in the domestic market.
Hyundai’s 5 percent gain comes on the back of 42k units sold, and Ford’s 15 percent on the back of under 6k cars sold. All other manufacturers have posted double digit sales decline in the range of 17 percent (Renault) and 75 percent (Nissan). The Renault-Nissan association seems to have taken the biggest hit in December 2018.