It's going from bad to worse for the auto sector, with a sudden slump in auto sales. Inventories are piling-up and dealers are finding it hard to push sales.
Auto sales for the month of July-2019.
Sales at Maruti slump
Sales at India's largest car maker Maruti saw sales slump in the month of July. Sales of mini cars Alto and old WagonR fell 69.3 per cent to 11,577 units, those of compacts (Swift, DZire, Baleno, Ignis, Celerio and new WagonR) fell 22.7 per cent to 57,512 units in comparison to the same time last year.
Those of utility vehicles Vistara Brezza, Ertiga, S-Cross dropped 38.1 per cent to 15,178 units and vans by 37.9% to 9814 units.
While total domestic sales fell 33.5 per cent, export sales too fell 9.5 per cent.
Sales at Mahindra and Tata too slump
Mahindra & Mahindra Ltd also saw auto sales declining 15 percent to 40,142 units on a yearly basis last month while its tractor sales fell 12 percent to 19,992 units, according to its stock exchange filing.
Commercial vehicles and light commercial vehicles also saw a drop in their numbers. The one good thing for the company is that the tractor sales did not dip sharply and there maybe some recovery in tractor sales this month.
Tata is also seeing a sharp slowdown with a 38 per cent drop in auto sales. The slowdown was across SUV, passenger cars and Heavy Commercial Vehicles.
Bajaj Auto and Escorts sales too drop
Bajaj Auto also saw total sales declining 5 percent year-on-year to 3.81 lakh vehicles last month, according to its stock exchange filing. Escorts on the other hand saw a dip of 15 per cent in July sales. The share price of the latter to has been constantly falling.
The worst impacted seemed to be Honda Cars, which saw a slump of almost 48 per cent in vehicle sales.
Retail banks may find the going tough
Retail banks that focus on auto loans and consumer loans, may find loan growth tough, given the slump in auto numbers. Banks like HDFC Bank, which cater largely to the retail segment, may also find loan growth much slower.
There are also reports surfacing that there could be defaults now from the retail segment, as joblessness rises, particularly in some sectors like aviation and BFSI, which may see significant downsizing.