Business & Finance

Car Industry registers decline this July- high base effect comes into play

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There was a reported decline of 0.6 percent in the sales of cars of Maruti Suzuki on July of 2018. This is speculated to be due to high-base effect of the same month last year. Whereas last year there was a rather abnormal growth of 37 percent in the same period, this year shows a decline. Maruti Suzuki is the country’s top-most car seller and its numbers reflect upon the sales of the majority of the companies running in India.

The fluctuations in the graph projecting the sales seen in last year’s June-July period owes to the application of GST and its transition. With minimum stock at the dealership level, there was a decline of about 11 percent on July 2017 as compared to the sales in the previous month. Apart from the compact car segment, Maruti Suzuki did not show any rise in the production and sales of the car. With a growth of 18 percent in the compact car segment, Maruti Suzuki stock price decline two percent on the BSE.

Although there has been an increased sale of cars at 152,427 units this July as compared to June this year, financially there was no growth this July due to high base effect of last year. Sa predicted by the experts, July has been a rather flat month with zero or declining growth. Other domestic car companies like Mahindra & Mahindra also show a decline of 6 percent in the sales this July. Only time will tell how this decline will play out.

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