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Sagging Auto Sector Sales Show Signs of Revival on Account of Depreciation Benefits and Heavy Discounts

The market is yet to see the recovery mode set in

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Auto, Sales, Depreciation
New introductions have also been instrumental in the slight recovery in passenger car and two-wheeler sales in September 19 over August 19, while the YoY numbers indicate the extremely cold nature of the market. Pixabay

Sagging auto sector sales showed signs of revival in September on account of depreciation benefits and heavy discounts.

“Depreciation benefits and discounts have helped a little bit in increasing sales in September in comparison to August,” said Sridhar V., Partner, Grant Thornton India LLP.

“New introductions have also been instrumental in the slight recovery in passenger car and two-wheeler sales in September 19 over August 19, while the YoY numbers indicate the extremely cold nature of the market. The market is yet to see the recovery mode set in.”

Additionally, the immediate price reduction due to lowering of effective corporate tax rate to 25.17 per cent (inclusive of all cess and surcharges) from 30 per cent for all domestic companies has helped to deepen discounts and drive-in some extra sales numbers.

Auto, Sales, Depreciation
Depreciation benefits and discounts have helped a little bit in increasing sales in September in comparison to August. Pixabay

In August, Finance Minister Nirmala Sitharaman announced several measures to boost the sector, including lifting a ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles bought till March 2020 among others. The decisions are likely to sustain the trend for a few more months.

According to Fitch Ratings Associate Director Snehdeep Bohra, the recent interest rate cut and lower base effect will help stabilise the YoY auto sales in October.

“What is really important is to pass on the interest rate cut to the customers. New launches ahead of the festival season, including BS6 compliant versions, are also going to support the sales momentum,” said Bohra.

However, some industry insiders contend that mitigated decline in sales on a MoM basis has been caused due to wholesale adjustment, since dealerships were over-stocked for the last couple of months. Effectively meaning that the dealers stopped buying from OEMs to reduce the stock pile-up.

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The auto industry is facing a severe demand slowdown on account of high GST rates, farm distress, stagnant wages and liquidity constraints.

The sales and production have plunged dramatically, leading to job losses. In August, all major Original Equipment Manufacturers (OEMs) comprising passenger, commercial, two and three-wheeler manufacturers reported massive decline in domestic sales.

As per the Society of Indian Automobile Manufacturers’ (SIAM) August sales figures, the overall sectoral offtake in the domestic market plunged 23.55 per cent to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year. September sales results are awaited.

Moreover, the industry has estimated that around 15,000 contractual manufacturing jobs have been lost and another million are at risk if the slowdown is not reversed. (IANS)

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Flipkart Witnesses Almost 50% Growth in New Customers

"Apple Watches earned over a month''s of their India business in the first six minutes of The Big Billion Days sale, said Flipkart

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Flipkart Buys Back Shares Worth $350 mn.
New e-commerce norms to impact e-tailers: Flipkart. IANS

Aiming to bring the next 200 million consumers to the e-commerce fold, Flipkart on Friday said that “The Big Billion Days” sale witnessed almost 50 per cent growth in the number of new customers compared to last year, with 70 billion views in six days of the sale that began on September 29.

Clocking record sales powered by shoppers and sellers from tier 2 cities and beyond, more than 50 per cent of Flipkart Plus shoppers were from smaller cities and towns, while sales from tier 3 cities grew by 100 per cent (YoY).

“We take immense pride in making e-commerce more inclusive through the introduction of some top categories which during this festive season, have been able to cater to the needs of Tier 2 markets and beyond,” Kalyan Krishnamurthy, CEO of Flipkart Group, said in a statement.

Nearly 50 per cent of top sellers on Flipkart witnessed 3X growth and over 40 per cent of transacting sellers during the sale were from Tier 2 and beyond towns.

“Among multi-platform e-commerce sellers, the wallet share seen on Flipkart by sellers was 70 per cent, while for fashion and home, our wallet share has hit as high as 80 per cent,” said Flipkart.

Fashion witnessed a 70 per cent growth in sales compared to last year and women customers contributed 45 per cent to overall fashion sales (units sold).

“Fifteen apparels, seven shoes and five accessories were sold every second during the sale period. In the Flipkart fashion portfolio, 20 brands sold more than 1 lakh units this time. The Flipkart fashion originals portfolio sales grew 100 per cent in the sale period,” the company informed.

The mobile category saw the biggest festive season till date, with brands achieving more than 2X growth over the last year’s sale.

Flipkart
Flipkart’s ‘Big Billion Days’ are back.

“More than 20 models sold over 100K units each during the sale, which is a first for any event. At the start of early access, there was a 1.5X spike in users, which reflects an eager anticipation for mobiles. There was 2.5X increase in adoption of product exchange in mobile phone purchases,” the e-commerce platform announced.

The Electronics category witnessed an overall growth of 50 per cent in new customers as 34 electronic accessories were sold every second during early access.

“Apple Watches earned over a month’s of their India business in the first six minutes of The Big Billion Days sale, said Flipkart.

In the large appliances category, one in two TVs, one in three washing machines, one in five refrigerators and one in five ACs bought in India during these six days were bought on Flipkart. Ten TVs were sold per second in the first hour of the sale.

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“The Big Billion Days has also brought our entire ecosystem together from our seller partners to artisans, weavers and consumers who were all able to spread festive cheers across categories,” said Krishnamurthy.

September 30 was the single largest day for commerce in the country as Flipkart emerged as the destination for large appliances with 2X growth on Day 1. The share of transactions via Flipkart’s credit options increased 70 per cent.

“Artisans and weaver partners through “Flipkart Samarth” programme witnessed over 100 per cent growth in sales while over 40 per cent of transacting sellers were from Tier 2 and beyond,” said the company. (IANS)