Car sales declined for the second consecutive month in June, dragged down by production delays in the country's largest car maker Maruti. But expectations of a robust monsoon and positive impact of the Seventh Pay Commission's recommendations for government employees pointed to a positive outlook for the crucial sector.
Car sales fell 3% in June compared to a decline of 1% in May . Maruti's volumes fell by a little over 10% to 92,133 units. This was largely due to the disruption in production at the company's Gurgaon and Manesar plants after a fire at its key supplier Subros.
The company's compact category of cars such as Swift and Baleno saw volumes dip by 12%, while the mini segment of Alto and WagonR was lower by 19%.
Notwithstanding troubles at Maruti, many of the other key players reported positive numbers. Honda is the only major company to have reported negative numbers as it has been hit by the sudden shift in demand to petrol variants, apart from a lacklustre response to some of its new launches.
Hyundai, the country's second-largest carmaker, reported 10% growth in numbers. Rakesh Srivastava, senior VP (sales & marketing), said outlook remains positive for the industry as the monsoon has been healthy so far and the pay panel recommendations for government employees are likely to lift the sentiment ahead of the critical festive season.
New models have been a key source of growth for the industry and these include Maruti's Baleno and Renault's Kwid. If one includes SUVs and UVs such as Maruti Brezza and Hyundai Creta, there has been a positive growth of nearly 3% in June (categorized as passenger vehicles), though this again has been dampened by the production loss at Maruti.
A softening of stand by the Supreme Court to the ban on diesel vehicles above 2-litre in the Delhi-NCR region is also expected to bring some relief to automakers such as Toyota and Mercedes-Benz.
Mahindra & Mahindra, the leader in the UV segment, hoped that demand will now pick up.
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