Truck Sales Drop By 60% Pan-India, Ashok Leyland Loses 70% Of Sales; Auto Stocks (Maruti, Honda, Mahindra) Crash

As per the reports coming in from stock market, Automobile and other sectors continues to feel the heat of worst slow down in history.

BSE auto index dropped 255 points to 15,513 as compared to the previous close of 15,768 on Friday.  Following the trend Nifty auto index too dropped 121 points to 6914 level in early trade.

All the automobile giants are reporting continues decline of sell in August. During early trade today, auto stocks continue to fall down. The giant in this industry like Maruti Suzuki India, Hyundai, Mahindra & Mahindra, Honda and Tata Motors reported a double digit decline in sales during August month.

Medium and Heavy Duty Vehicle Sales Also Affected

The sales of medium and heavy duty commercial vehicles are also affected by the cruel grasp of slow down. They have reported a drop of more than 50% during the month of August.

There is a 5% growth reported in Indian economy in June quarter which is slowest in over 6 years. The manufacturing sector worst performed with a reported growth of 0.6%.

To encourage buyers a discount of 8,00,000 to Rs 9,00,000 is being offered for commercial vehicles.

Rajan Wadhera, president of the Society of Indian Automobile Manufacturers (Siam) said that the truck industry is in poor condition. Discounts of Rs 8,00,000 to Rs 9,00,000 are unheard of. He thinks sales will not improve unless consumption revives and the economy improves.

Damage Done In the Auto Industry

The automobile giant Maruti Suzuki informed a 33% fall in August sales at 1,06,413 units and on the other hand, commercial vehicle manufacturer Tata Motors dropped 58% during August.

Tata Motors share price dropped 4.58% to Rs 111.4 intraday compared to the previous close of Rs 116.75 level. Also Maruti Suzuki share price slumped 1.88% intraday to Rs 6,006 as compared to the previous close of Rs 6,121.60 on BSE index.

Mahindra and Mahindra (M&M) too informed a drop of 25% with 36,085 sold units. Last year they have sold 48,324 units in August2018. Its stock also fell in early trade with 2.91% to Rs 513.5 compared to the previous close of Rs 528.90 on BSE index.

While Honda Cars India has reported a drop of 51% in sales and Toyota Kirloskar Motor (TKM) has reported a drop of 21% for the same time.

In total there is a 26% drop in sales is reported in automobile industry with 33,564 units sold as compared to 45,373 units sold in August 2018.

Truck manufacturer Ashok Layland reported a record sales drop of 50% with 8,296 units sold in August. TVS Motor Company reported a 15% drop in sale and Eicher Motors informed a drop of 224 percent with 52,904 units.

As per the reports, the BSE auto index slumped 255 points to 15,513 as compared to previous close of 15,768 on Friday. Following the trend Nifty auto index too dropped 121 points to 6914 level during the early trade as reported. 

Tracking the fall in August sales, Eicher Motors share price fell 2.52% to Rs 15,850 on BSE.

In the meantime, Sensex and Nifty were continues to report fall with red in display. Sensex fell 413 points to 36,919, Nifty fell 127 points to 10,895 levels.

How Automobile Industry Is Coping With The Decline

In the need of the hour, automobile manufacturers are offering huge discounts, scheme and innovative offers to attract consumers.  Mostly companies are hoping a good sell due to arrival of festival season.

 “There are worries over overvaluation and asset quality along with various official unions of banks coming out and opposing the merger. There are also concerns over asset quality of various banks that are underperforming by large and now being merged.

For example, while Canara bank has been posting a net profit and in its last report it was up 12% on the back of an increase in total income, we have Syndicate Bank which is in net loss despite higher total income.  Since merger is a long-term story in financial consolidation of the PSBs space, there are now concerns over asset quality mix and rather this would turn out to be a burden on a much healthier bank in terms of books.” said CEO of Epic Research Mustafa Nadeem.

Tata Motors president (commercial vehicles), Girish Wagh said “A subdued demand sentiment due to poor freight availability, lower freight rates, and a general slowdown in the economy continued to hamper the commercial vehicle demand,”

He also showed hope saying “We are looking forward to a positive impact of the recently announced stimulus package by the government”.