Car Sales Drop in June as Dealers Trim Inventory Ahead of GST

Dealers were busy clearing inventory and hence fresh dispatches of cars from the factory dropped in June.

Most dealers focused on clearing inventory in June.

(Photo: Reuters)

June is usually a pretty dull month for car sales and a good month to go bargain hunting. However, this year, buyers didn’t have to bargain hunt as dealers themselves were running pretty huge discounts on cars to clear inventory ahead of the Goods and Services Tax regime kicking in.

While that was a good thing for buyers, the dealers refused to take on too much fresh stock from car companies’ factories, as they didn’t want to be saddled with excess stock – with uncertainty arising on how they would have priced the cars once GST kicked in on 1 July. That has clearly reflected in the latest sales figures for June 2017, put out by SIAM (these figures track dispatches from the manufacturer to the dealer and not actual sales from the showroom).

Top Sellers in June 2017

• Hatchback: Maruti Alto
  Premium hatchback: Hyundai Elite i20
  Compact sedan: Maruti Dzire
• Compact SUV: Maruti Vitara Brezza
• Midsize sedan: Honda City
• SUV: Hyundai Creta
• Premium SUV: Toyota Fortuner

While some car brands were pretty severely hit in terms of sales numbers, it was almost business as usual for some others. Here’s how the various segments fared.

Hatchback Sales

Sales of most hatchbacks except the Tata Tiago, Datsun Redi-Go and Maruti Celerio dropped in June. (Photo: The Quint)

Tata has been steadily making inroads with the Tata Tiago hatchback. This car’s sales have been picking up, and it is now neck and neck with the Renault Kwid. Maruti’s Alto continues to outsell all other hatchbacks, but it did see a significant drop in sales in June, as dealers sold off existing stocks before picking up fresh inventory from the factory. June also saw the closure of the Maruti plant for maintenance, which also affected sales.

The Tata Tiago has been steadily increasing in sales. (Photo: Tata Motors)

Premium Hatchback Sales

Despite hefty discounts being offered in June, most premium hatchback sales dropped significantly.(Photo: The Quint)

The Hyundai Elite i20 held steady, while the Volkswagen Polo saw a mild uptick in sales in June. In fact, the Hyundai i20 is the best-selling premium hatchback in June. All the rest saw sales drop significantly as buyers preferred to wait for better deals and dealers did not pick up fresh stocks from the factory. Sales of the Maruti Baleno dropped below that of the Hyundai i20 to the number three spot, while the Swift was at number two.

Compact SUV Sales

Honda bucked the trend with sales of the WR-V in June. (Photo: The Quint)

The Maruti Vitara Brezza saw sales drop by nearly 25 percent compared to May, but it continues to be the largest-selling compact SUV, selling over 8,200 units. Honda saw an increase in sales of its Honda WR-V in June, as it was running good deals in its pre-GST discount sales. Sales of the Ford EcoSport and Mahindra TUV300 don’t appear to have fallen drastically.

The Maruti Vitara Brezza is the most popular compact SUV.  (Photo courtesy: Maruti)

Compact Sedan Sales

The Maruti Dzire continues to see good demand. (Photo: The Quint)

The new Maruti Suzuki Dzire has bucked the trend in June. Just a month after its launch, it continues to grow in sales, clocking over 12,000 units in June. Sales of the Dzire had dropped in previous months as buyers were expecting the new one in May. Most other compact sedans also saw fairly steady sales in June, although most were slightly lower than the previous month.

Midsize Sedan Sales

Honda City takes the lead from the Maruti Ciaz in June. (Photo: The Quint)

Among midsize sedans, the Honda City got back into the lead with a strong uptick in sales. Honda’s discounts before GST kicked in appear to have worked for the City. Sales of the Ciaz slipped to 3,950 cars, with the Ciaz now moving to Nexa (Maruti’s premium sales outlets). The Nexa network is not as large as the existing Maruti Suzuki showroom network. Good finance schemes from Skoda, saw the Rapid continuing to perform better than its cousin, the Volkswagen Vento. Hyundai Verna sales are pretty low as a new car is expected in August.

SUV Sales

Despite hefty discounts, SUV sales dropped as most buyers were waiting for better prices post GST. (Photo: The Quint) 

The Hyundai Creta continues to lead in SUV sales, despite seeing a drop in numbers in June. Most SUV sales were down as buyers expected better rates once GST kicked in. Dealers were offering discounts to get rid of existing stocks and hence dispatch numbers dropped overall.

Hyundai Creta continues to be the best-selling SUV.  (Photo: Hyundai)

Premium SUV Sales

Most buyers preferred to wait for GST to kick in before buying SUVs. (Photo: The Quint)

The biggest drop in sales (or rather dispatch) numbers appears to be in the premium SUV segment. With most buyers expecting discounts and prices to drop post GST, dealers were busy getting existing inventory out of their gates. Toyota, which has consistently been seeing 1,500 plus sales of the Fortuner every month, saw only 356 vehicles being dispatched. The Volkswagen Tiguan, launched in May, saw sales drop to just nine vehicles in June. Ford saw two-digit dispatch figures for the Endeavour for the first time since its launch in 2016.