In May auto sales reinforce the gloom surrounding auto firms. Data released by the Society for Indian Automobile Manufacturers Ltd on Tuesday showed a drop in domestic wholesales numbers across segments. This reinforces a weak demand sentiment in the market, even as it implies high inventory and weaker retail sales.
It looks like passenger vehicles (PV) and medium and heavy commercial vehicles (M&HCVs) were the worst hit. Sales in May contracted sharply by 20.6% and 19.7% from the year-ago period in these two segments, higher than 17.1% and 13.6% seen in the month of April. That’s not all.
Over the past week, seven out of the top ten PV firms have announced production cuts for the month of June. If some have called it a routine maintenance shutdown, others have stated their intent to align production with dealer inventory levels.
Read EquityPandit’s Nifty Auto Outlook for the Week
In M&HCVs, the fall was led by Tata Motors’ 38% decline, year on year, while Ashok Leyland sales saw a small single-digit contraction.