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Maruti reports 54% YoY decline in sales in June; sells less than 40% of pre-coronavirus level

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India's largest carmaker Maruti Suzuki reported a 54 percent decline in sale of passenger vehicles in the domestic market in June at just 51,274 units. June was the first full month since the lockdown restrictions were eased in the middle of May but the company's tally was less than 40 percent of its pre-Covid19 levels of February.

The company registered a 44 percent decline in sales at 10,458 units in the mini car category that comprises cars like Alto and S Presso, while its most voluminous compact segment consisting of brands like the Wagon R, Swift, Celerio, Ignis, Baleno and Dzire registered an over 57 percent drop at 26,696 units. In the mid size sedan segment (Ciaz) the decline was the steepest at 76.2 percent with sales of just 553 units. Utility vehicles saw a 45 percent drop at 9,764 units, while vans registered a 59 percent decline at 3,803 units.

Contrary to expectations, the numbers are significantly lower than the levels the company was operating at in February when it had sold 133,702 units. During the course of June, several companies had said they hoped to recover upto 60-70 percent of pre-Covid era sales during the month. The company has said nearly 90 percent of its 3,087 dealerships are now open across the country. "There is way too much uncertainty to predict when we will get back to normal levels. The definition of normal itself may need to be revised," company chairman R C Bhargava had said last month.

Analysts have predicted companies like Maruti and Hyundai that have higher penetration in rural markets and a sizeable portfolio of cars at the low end entry level segments may stand to gain in the post-Covid era as consumers may shift from public transport to private usage on concerns of health. Bhargava has however said it is too early to judge whether there has been any such impact yet.

"We also have to take into account job losses and salary cuts. Consumers may be less inclined to purchase big ticket items," he had said. Others have not fared any better either. Toyota Kirloskar Motor reported a 63.5 percent decline in sales last month at 3,866 units, which was also around 37.3 percent of its pre-Covid sales tally of February 2020.  

"With demand gradually coming back in the market and with strong support from our dealer partners as well as the hard work of our SBUs (Strategic Business Units), we have been able to keep up with customer expectations. Thanks to our special financing offers and buy back offers which has also helped bring customers back to dealerships. Our retails (sales from dealers to customers) is nearly double of wholesales (sales from TKM to dealers) second month in a row thereby bringing down our dealers inventory carrying cost by more than 50 percent over the past two months. We are also seeing a visible growth in online enquiries as well as bookings," said Naveen Soni, Sr. Vice President, Sales & Service, TKM.

"Post COVID the market has been showing a shift towards entry level suffix in all products that we sell and we are monitoring such trends and adjusting our future production according to market demand based on Toyota Pull System which supplies vehicles to dealers when it is required, where it is required and how much is required. Our production side has been helping us ramp production to be able to meet customer requirements. Going forward, we would like to focus on ramping up production while placing the highest priority to the safety and well-being of all stakeholders and by adopting the 'Safety and Health First' approach at all times."

MG Motor that is owned by China's largest automaker SAIC and sells the Hector SUV in the country reported sales of 2,012 units last month. The brand debuted in India in the fag end of June 2019, so a comparison to last year is not valid. As the sole Chinese firm in the country, MG, however, may be at the receiving end of the ongoing campaign to boycott Chinese products in the country. A number of its customers have already posted their cancellation orders on social media in the last fortnight. MG was also one of the first companies in India to be face disruption due to supply chain issues as a result of the coronavirus pandemic in China at the start of this year. The company said it continues to face headwinds on supply chain and logistics issues.

"Even though our sales performance in June 2020 was better than May this year, we continue to face headwinds in supply chain and logistics due to multiple issues," said Rakesh Sidana, Director - Sales, MG Motor India. "Our teams are doing their best to overcome these challenges and we are looking forward to the launch of the Hector Plus in July 2020."


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