Auto sales contract in November as firms enforce inventory control

Auto sales, a key barometer for economic growth, contracted after three months of robust growth as automakers trimmed production to reduce inventory pile up at dealerships.

Despite record wholesale numbers in October, dealers had warned vehicle manufacturers, and especially two-wheeler manufacturers, to curb production in November due to high inventory in the system, saying that retail sales hadn’t recovered, leading to pile up of inventory.

“We once again caution both OEMs (original equipment manufacturers) and dealers to keep a check on vehicle inventory as post-festival demand may remain subdued. Since inventory levels are at their highest during this financial year, it may impact dealers’ financial health, leading to closures and job losses,” the Federation of Automobile Dealers Associations (Fada) had said.

Auto companies in India report wholesale dispatches as monthly sales figure.

Maruti Suzuki reported a 2.4 per cent year-on-year (YoY) decline in domestic wholesales for November to 135,775 units, as it reduced vehicle inventory at dealerships after the festive season. It had sold 139,133 units a year ago. Sequentially, factory dispatches decreased from 166,825 units in October and 150,040 units in September.

Sales of mini-cars Alto and S-Presso declined 15.1 per cent 22,339 units in November. Meanwhile, those of compact cars — Swift, Baleno, Ignis, WagonR, Celerio, DZire — fell 1.8 per cent to 76,630 units. Wholesale volumes of midsize sedan Ciaz rose 29.1 per cent to 1,870 units, albeit on a low base.

The sales of Hyundai, the second largest passenger vehicles manufacturer, also reflected the industry’s strategy to control production. The company reported a 9.4 percent YoY increase in domestic dispatches to 48,800 units in November on the back of decent demand for its sport utility vehicles, Venue and Creta. However, sequentially, dispatches declined from 56,605 units in October and 50,313 units in September.

“As the smart Indian customer continues to make smart mobility choices, the recently introduced all-new i20 has helped carry forward the festive momentum even in the post Diwali period for HMIL and facilitated a sales growth of 9.4 per cent in November 2020 over the same period last year,” said Tarun Garg, director, sales, marketing and service, Hyundai Motor India.

The country’s largest two-wheeler maker Hero Motocorp said it is seeing an increase in demand and is continuously ramping up supply and production across its manufacturing units to cater to this.

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