May 2019 Car Sales – Snapshot

Tough times persist for the Indian Auto Industry and even tougher times lurk ahead. The Passenger Vehicle sales saw a dip of -21% in May’19 v/s May’18. The de-growth extent is now increasing every month and has questioned the viability of many dealer establishments. Considering the stats – on an average two vehicle dealerships have shut every week over the past two years! With the Indian automotive retail sector incurring losses of at least Rs 2,000 crore in this period, over 205 dealers have wound up operations and shut 300 outlets as their business turned un-viable and an estimated 3,000 people have lost their jobs.

Source: ET

Base effect along with high finance cost and liquidity constraints has primarily pushed to subdue automobile sales in May. Lower consumer sentiment and the recently concluded general election also had a major part in sales slowdown. The high inventory levels at the dealerships has been a consistent concern and all OEMs are trying their part to lower the dealer stock which is even more hampering the monthly offtake volumes.

Let’s see how the OEMs fared in May’19 –

  • The nation’s top automaker, Maruti Suzuki reported the highest Market Share fall in May’19. It lost a staggering 3.1% MS in May’19 owing to low wholesale volumes in the month. It registered a YoY degrowth of -25.1% and Maruti’s loss was primarily Hyundai’s gain.
  • Hyundai was the biggest winner in May’19. Though it saw a degrowth of -6%; the OEM registered an increase of 2.9% in terms of Market Share. A lot of this success could be attributed to the launch of the sub-compact SUV Venue.
  • Mahindra establishes itself as a clear No.3 post XUV300’s launch and sells a staggering 7,403 units more than the 4th ranked Toyota.
  • Toyota topples Tata & Honda to become the 4th best-selling OEM. Glanza effect? We shall let you know shortly.
  • Tata grappling with low performance? Maybe yes, maybe no. Tata has recently taken a stand to lower dealer stock and is clearly visible from the recent communication it shared to its channel partners –

  • Nissan+Datsun are unable to understand on how to recover from the monthly shortfall. The OEM registered the highest YoY degrowth at -48%. No wonder; in 2017-2018 Nissan had the most number of dealers shutting shop (38 dealers to be precise)!
  • Another shocker of May’19 was the decline of FCA volumes. FCA now ranks last in the table and Skoda has effectively pushed the Italian carmaker to the bottom. Fiat is primarily on its deathbed and could sell only 14 units in May’19; while Jeep sold a meager 977 nos in the past month.

Market Shares figures for May’19 –

5 thoughts to “May 2019 Car Sales – Snapshot”

  1. Legacy management teams at OEMs want to keep dealers in their control. Offers announced by OEMs are not transferred to customers by some dealers anyway. This is time to give some freedom to dealers in managing their own discounts. There should be no limit on the maximum discount from OEM. Entry models can be sold online at a discount and delivered by OEMs at least in the radius of 300 km from factories. Tata announced online sales a few years ago and never gone ahead with that. Maruti Eeco should see some demand in future due to the axing of Tata ACE segment. The red period is here to stay for some time until next April.

    1. Today I think big showroom space is not needed to lure the customers. Majority of the people get information about the product thru internet.
      For feel and touch experience 1-2 demo vehicles kept. Simulators can be made and kept at dealership to make the people experience the driving pleasure of the vehicle he is planning to purchase.
      Online sales model should be developed for Tire 1 and Tire 2 cities to reduce the inventory at the dealerships. Like Tesla model can also be developed where the vehicle is directly delivered to the customer thru warehouse. This will saving cost for the end customer by reducing the margin of channel partner.
      Company can also have One Company Owned dealership in Tire 1&2 cities instead of multiple dealers which makes the dealership model non-viable for many companies.
      Channel partners can be made for service/ repairs of vehicles only.
      For rural markets dealership model can continue.

  2. Its a tough time to all dealers but still i think in next few months auto industry get stable, may be we do not see too much YOY growth but definitely we see MOM growth. But for OEM’s who are selling less than 5K numbers in a month definitely need to think for their future businesses, As like Toyota may be they also done some Tie-up with Indian OEM or Maruti & Hyundai. I think it is necessary for them to reach till the last customer who stay outside the city.

  3. Let’s keep it simple, Owning an Automotive dealership was and will remain in fashion.
    Dealership evaluation process, market data analysis based on demography and growth is no longer a part of process or should I dilute by saying this key criteria gets diluted.
    Automotive manpower goes around in circles one manufacturer to another, one dealership to another.
    No customer behaviour data, pattern, study or even for matter of fact dealership viability study is not conducted.
    Funds management is as always a challenge.
    Even workshop viability is a big question.
    The OEM’s are rigid, Dealership owners in distress, customers in distraught and market disoriented.
    The whole automotive dealership operation model needs remodelling.
    The OEMs need to revisit their last 5 years road map and re write their next 5 years roadmap. (Perception is everyone is already doing what is been suggested) then why the downfall and crisis.
    I can say this with conviction and faith because I have been working for downfall since 2016. We have been working on remodelling, however there are reluctant OEMs and Dealership owners who trying to grasp for that last breathe in turbulent waters. Rather than taking simple advice to simple techniques to stay afloat.
    I will continue the remodelling process and keep sharing the best practices and learning hoping there are still some business owners who want to survive.
    The downfall is critical and definite so long we actually don’t address the issue.

  4. This is bound to happen when the dealership is not able make money with all the investment they have did . The place where dealer is bleeding has never been addressed .

    1. Uncontrolled discounts .
    2. Improper financial management by Dealer
    3. Most importantly recycling of vehicles to make way for new vehicles .
    4. RTO norms .
    5. OEM dumping .
    6. Unethical practices etc to name a few .

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