June: Car sales slowdown - Views on News from Equitymaster

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June: Car sales slowdown

Aug 10, 2000

All the major car manufacturers have seen a slowdown in car sales in the June 00 over May 00. Even though on a year on year basis most have reported robust growth rates, there seems to be a slowdown in the current year. As can be seen from the table below, Daewoo Motors have reported a strong growth in volumes in June 00 over June 99 by 82%, however as compared to May 00 this is a decline of 25.7% YoY.

car volumes slowdown
Nos. June'00 June'99 May'00 YoY %
change
MoM %
change
Maruti 14,715 23,469 25765 -37.3% -42.9%
Telco 4,096 3,656 5177 12.0% -20.9%
Hyundai 6,116 4,634 7561 32.0% -19.1%
Honda City 801 750 903 6.8% -11.3%
Daewoo 4,702 2,584 6325 82.0% -25.7%
As Maruti's sales for June'2000 are only for 15 days, they are not comparable to others.

Considering that YoY growth still continues to be strong, the car segment continues to do well, however the slowdown could be a sign of worry. If we were to take the combined figures of April and May' for both the years as given in the table below, the growth remains robust in the current year due to exceptionally strong volumes in May 00 as compared to May 99.

April-May-'2000 April-May'99 % change
Maruti 40,480 57,591 -29.7%
Hyundai 13,677 9,153 49.4%
Honda City 1,704 1,476 15.4%
As Maruti's sales for June'2000 are only for 15 days, they are not comparable to others.

However this slowdown in June is a cause of concern as in the previous year, for the period June 99 over May 99 most companies reported a small growth in volumes, as compared to a fall in the current year.

The reasons for this slowdown in the passenger car market as is in other segments of the automobile industry in the current year, is imposition of uniform sales tax. However the future looks bright for the passenger car segment with lower interest rates, availability of attractive car finance schemes, improvement in the economy and pick up in the second hand car market. Price increases have been minimal especially in the small car segment as competition is intense, this should continue to spur the volume growth in this segment.

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