Big discounts and faster delivery may have helped some automakers post higher monthly sales numbers in June, but not all are expected to share the bounty. Car and two-wheeler dealers came up with new offers and discounts last month as they looked to de-stock before the Goods and Services Tax (GST) came into effect from July. This also meant that they were not willing to keep a big inventory in their own stock yards, which in turn may have impacted the number of vehicles leaving factories. Consumers on the other hand, may have decided to hold back on new purchases, in anticipation of lower prices under GST, said some analysts BloombergQuint spoke to.
The country's largest carmaker Maruti Suzuki India Ltd. is not expected to face such a bump though, with a long wait list ensuring that its sales continued to grow in double digits. The carmaker is expected to post 11 percent rise in monthly sales, shows a consensus of analysts polled by BloombergQuint. Eicher Motors Ltd. the parent company of Royal Enfield is also expected to continue posting double digit growth. The companies which may miss the bus are commercial vehicle manufacturer Ashok Leyland Ltd. which has had a rough ride so far in the current financial year, and Bajaj Auto Ltd.
A shortage of Bharat Stage - IV compliant components may also hit commercial vehicle sales last month.
Here's what brokerage firms expect from June auto sales:
SBI Capital's View
- Maruti Suzuki: Retail demand remains strong with long wait-lists for recent launches
- Hero MotoCorp: Inventory build up seen ahead of the upcoming festive season, resulting in an uptick in overall volumes
Motilal Oswal's View
- 2-wheeler and passenger vehicle wholesale volumes expected to remain weak
- De-stocking at dealer level seen due to GST-related uncertainty
- Maruti: Demand for Baleno, Vitara Brezza and New Dzire continues to remain robust
- Tata Motors: Volumes to remain weak due to de-stocking prior to GST implementation
- Domestic 2-wheeler and 3-wheeler volumes to remain weak on muted demand
Nirmal Bang View
- Lower dispatches because of GST to impact sales
- Original equipment manufacturers already cut prices ahead of GST implementation
- Most companies likely to post double-digit decline in sales year on year
- M&M Tractors: Expect GST-led lower dispatches to restrict growth in sales
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