Discounts and Freebies Fail to Stir Up Auto Market

December too could not bring any relief to the Indian automotive Industry. It was one of the worst months for the car and commercial vehicle (CV) segments. Production cuts and temporary plant shutdowns marked a torrid 2012 for India's auto industry, amid heightened fears of an economic slowdown in Asia's third-largest economy.

The reasons for such a lacklustre performance are not far to seek. Volatile fuel prices, high interest rates, rupee depreciation and economic slowdown have hit virtually all the segments and car & commercial vehicle segments, in particular.

Car sub-segment, within the passenger vehicle segment, was severely hit, with domestic sales plunging by 12.5% y-o-y to 141,083 units during December 2012. Even the year-end hefty discounts and freebies announced by manufacturers on almost all models, including some of the diesel cars that had been enjoying waiting period for delivery until not long ago, could not lure the customers. However, utility vehicles were on course to record a healthy 41.1% growth in domestic sales at 45,049 units in December 2012. Overall, domestic sales of passenger vehicle segment, including passenger cars, utility vehicles and vans, dipped 1.1% y-o-y to 206,865 units. Passenger vehicle exports that zoomed by 31.6%, provided some respectability to the tally with sales including domestic market and exports witnessing a 4.1% rise y-o-y to 258,962 units during the month.

Slowing economy has cast its long shadow on commercial vehicles, especially M&HCVs that have been reeling under acute recession since the advent of current fiscal. The month of December was no different in that the domestic sales of M&HCVs dived 38.3% y-o-y to 19,105 units. LCVs also showed signs of decelerating, posting a single-digit growth of 6.1% at 43,681 units.

Two and three-wheelers held on tenuously in December 2012 to record unimpressive single-digit year-on-year growth at 4.5% and 5.9%, respectively.

Market leader in passenger vehicle segment, Maruti Suzuki India Ltd (MSIL) survived the downbeat mood in the market to notch up a 5.9% growth in its domestic sales to 82,073 units in December 2012 from 77,475 units a year ago. The growth was shored up by Swift, Swift Dzire and Ertiga, which continue to clock robust growth. On the other hand, the company’s mini segment comprising Alto, M800, A-Star and WagonR, turned in lackadaisical performance, slipping by 15% y-o-y. Exports were also n negative terrain, falling by 11% y-o-y to 13,072 units. 

The second largest player, Hyundai Motor India Ltd (HMIL) ended up with a negative growth of 9.6% y-o-y in December 2012. Domestic sales of HMIL in December 2012 were 26,697 units, as against 29,516 units in December 2011. Aggregate sales, including exports of 21,136 units, stood at 47,833 units vis-a-vis 49,050 units a year year, reflecting a 2.1% de-growth. 

Commenting on the year-end sales, Rakesh Srivastava, VP-Sales & Mktg, HMIL said, “In the year 2012, in difficult market conditions, we were able to improve on volumes while maintaining market share in passenger cars.” 

Mahindra & Mahindra Ltd (M&M) held out with a 6% rise in its auto sales numbers, which stood at 45,297 units (including sales of Mahindra Navistar) during December 2012 compared to 42,761 units during December 2011.

M&M’s domestic sales at 42,307 units during December 2012, increased by 6%.over 39,891 units a year back. Passenger Vehicle segment (which includes the UVs and Verito) registered a growth of 18%, having sold 22,761 units in December 2012, as against 19,341 units in December previous year. Exports during the month of December 2012 grew by 4% y-o-y to 2,990 units. 

Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive Division, M&M said, "High interest rates, rising fuel prices and an overall slowdown in economic growth have kept consumer sentiment low during 2012. At Mahindra, we are happy to maintain our growth momentum even during these challenging times."

Record exports for the third consecutive month combined with steady domestic demand helped Ford India end 2012 with sales of 10,899 units in domestic and export markets in December, despite persistent market challenges. Ford India’s domestic sales remained healthy with 6,517 vehicles sold in December 2012 compared to 5,978 units sold in the same month previous year, a 9% year-on-year increase. Ford India’s exports rose to 4,382 cars in December 2012 – the highest-ever exports in its history and more than doubling from 1,685 units exported in December 2011. Year-to-date exports stood at 30,435 units – up 35 % over previous year.

“Despite a tough business environment. we have seen record exports and sustained customer interest in December,” said Joginder Singh, President and MD, Ford India. 

Ford India also organised its Midnight Sale on December 5, with the company’s 160 sales outlets across the country remaining open from 8 am till midnight and allowing customers to win free gifts and avail exciting offers.

In 2012, the company also stepped up its efforts to reach out to customers and reduce cost-of-ownership for them by pushing further into tier-two and three cities and towns and opening new channels of service. Ford India’s pan-Indian network of sales and service outlets, which stood at 200 in December 2011, have seen a 25% spurt in the current year to reach 250 across 130 cities. The company plans to take the number to over 500 by mid-decade.

Riding on low base, Honda Cars India Ltd (HCIL) clocked a whopping 296% surge in its domestic sales at 4,242 units during December 2012, as against 1,072 units sold in December 2011. The company also exported a total volume of 422 units during the month. Model wise sales break-up of HCIL in Dec’12 is: Brio – 2,286 units; Jazz – 365 units; City – 1,442 units; Civic – 70 units; and Accord – 79.

Toyota Kirloskar Motor (TKM), the fifth best seller in the country, recorded a huge 24.3% dip in December 2012, managing to sell 12,071 units in Indian market, as against 15,948 units a year ago. However, Toyota’s top seller Innova that was constantly among the top 10 selling cars, made a strong comeback with 6,458 units, recording a healthy 28.6% uptick y-o-y.

Sandeep Singh, Deputy MD and COO, Mktg & Commercial, TKM, said “Though we are satisfied with our overall sales volume in 2012, the passenger car market continues to be slow. We hope the New Year will usher in good times again with economic revival and better market sentiment.”

Tata Motors could not get out of the sticky situation it has been in for better part of the FY 2012-13. Total domestic sales of Tata Motors, including passenger vehicles and commercial vehicles, witnessed a sharp 19.5% drop y-o-y to 61,700 units and the exports were down 30.9% to 3,882 units during the month of December 2012.

Passenger Vehicle Business Unit of Tata Motors saw its domestic sales plummeting massively by 50.2% y-o-y to 14,087 units in December 2012. 

Domestic sales figures for Tata Motors’ commercial vehicles were also unflattering. M&HCVs posted an unenviable 45.9% fall in domestic sales to 9,866 units from 18,248 a year ago. The saving grace for the company was the performance of its LCVs that recorded a healthy 25.4% y-o-y increase in domestic sales at 37,747 units during the month.

Mirroring the economic environment and sluggish market conditions, Ashok Leyland, the second largest CV maker, was also in the negative terrain. The company posted a 16.5% contraction in its total sales volume in domestic market, which stood at 6,719 units in December 2012 compared with 8,042 units a year ago. The domestic sales volume was boosted by “Dost” that continued its impressive run with a robust growth of 87.8% to 2,431 units during the month.

Ditto for Volvo Eicher Commercial Vehicles (VECV), which saw its domestic sales slid by 20.3% to 3,598 units in December 2012.

Two-wheelers did better relatively, clocking positive growth. However, the performance was a far cry from the heady double-digit sales growth in the previous 5-6 years.

Bajaj Auto came up trumps clocking a 17.1% increase in domestic sales of two-wheelers to 198,394 units and 6.1% growth in two-wheeler exports at 99,956 units during December 2012.

Honda Motorcycle & Scooter India (HMSI) held steady, growing by 10.8% in domestic sales at 199,237 units and 59.4% in exports at 18,275 units in December 2012.

Domestic sales of Hero MotoCorp rose marginally by 1% to 527,375 units in December 2012.

TVS Motor and India Yamaha Motor were on a sticky wicket, posting negative growth of 8.3% and 24.5%, respectively, in domestic two-wheeler sales during the month.

Suzuki Motorcycle continued to move up the ladder with a growth of 25.5% in its two-wheeler sales in Indian market, which read 33,313 units in December 2012.

The auto industry is truly going through worst of its times. Small wonder then, SIAM has come up with its third downward revision of its estimates of vehicle sales during the FY 2012-13. Repo rate cut by RBI, which is widely expected, can give a fillip to the auto market.  

 

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