Vehicle Sales Stuck in Slow Lane

 India's annual car sales fell for the first time in a decade in the financial year just gone by. 


The script of falling sales numbers and low market sentiment repeated itself during the month of March 2013 that normally brings in healthy sales volumes with operators and corporates taking the advantage of depreciation benefit under the Income Tax Act.

The market continued to reel under severe slowdown, with domestic sales of vehicles across segments declining by 8% to 1,486,522 units in March 2013. The slowdown was all-pervasive and palpable in all segments, with the exception of UVs.

Car market in India, two years ago the world's hottest growth market after China, has been sliding for a year now, dragged down by high interest rates, volatile fuel prices and prolonged spell of economic uncertainty. Barring few models, automobile dealers are saddled with inventory build-up and plagued by huge discounts.

Badly dented and mauled, domestic car sales plunged 22.5% to 180,675 units in March 2013 from 233,151 units a year ago. However, UVs stayed on fast track galloping by 34% y-o-y to 53,866 units.

In FY’13, which ended on March 31, car sales in home market fell 6.7% to 1,895,471 units, as compared to 2,031,306 units sold in FY’12. Sales in the segment had earlier declined in 2002-03, by 2.1%. This is the sharpest drop recorded since 2000-01, when passenger car sales fell 7.7%.

Overall, however, passenger vehicle (PV) sales during the year went up marginally by 2.15% to 2,686,429 units, buoyed by the demand for diesel-driven utility vehicles.

Reflecting the cooling Indian economy, commercial vehicle sales in domestic market at 84,956 units in March 2013 were down 6% y-o-y. The situation would have been worse but for the continuing good sales performance of LCVs that rose 10% y-o-y to 55,365 units during the month. M&HCVs stayed in the negative terrain, sliding by 26.2% y-o-y to 29,591 units. Domestic sales volume of CVs during the FY’13 contracted 2% y-o-y to 793,150 units.

With slowdown pervading two-wheelers as well, domestic sales in two-wheeler segment slipped by 7% y-o-y to 1,101,058 units in March 2013. Two-wheeler exports, however, stayed on course to notch up a 3.5% growth at 150,281 units in March. Overall domestic sales figure of two-wheelers for the FY’13, reading 13,797,748 units, recorded a 2.9% uptick y-o-y.

Car market leader, Maruti Suzuki India (MSI) saw its domestic sales fall by 4.3% to 107,890 units in March 2013 from 112,724 units a year earlier. The company’s exports at 12,047 units were also down 8.9% y-o-y.

The second largest car player in Indian market, Hyundai Motor India Ltd (HMIL) witnessed domestic sales of 33,858 units in March 2013, which reflected a 13.5% drop from 39,122 units in the same month last year. HMIL’s exports, on the other hand, were in positive territory, rising by 12.3% y-o-y to 22,579 units during the month.

The segment-wise cumulative sales of HMIL for March 2013 were: A2 segment (Santro, Eon, and i10) - 47,678 units; A3 Segment (Accent and Verna) - 8,143 units; A4 Segment (Elantra) - 546 units; A5 segment (Sonata) – 20 units; and SUV (Santa Fe) - 50 units.

Mahindra & Mahindra Ltd (M&M) continued its excellent run, selling 25,847 passenger vehicles in the Indian market during March 2013, which translated into a 12.6% uptick y-o-y. While domestic sales of Mahindra UVs at 24,636 units clocked an impressive 16.2% rise, the sales of Verito, witnessed a massive 31.3% de-growth to 1,211 units in March 2013 from 1,763 units in March last year.

Speaking on the performance, Pravin Shah, Chief Executive, Automotive Division, M&M, said, “We are happy to have crossed the half a million sales mark for the first time, during FY 2012-13, given the challenges and the pressures the auto industry is currently facing. At Mahindra, we hope to create excitement in the market during FY 2013-14 especially with the launch of our sub-4-metre Verito.”

Honda Cars India Ltd (HCIL) sold 10,044 units in the month of March 2013 as against 11,016 units in March 2012, thereby registering a negative growth of 8.8%. This was despite despatches of Amaze to dealerships starting in March. Overall, the company posted a 35% increase in its sales volume at 73,483 units during the FY’13 as compared to 54,420 units in the FY’12. HCIL also exported 2,610 units during the fiscal year 2012-13.

Model-wise break-up of domestic sales of HCIL in March  2013 read: Brio – 3,917 units; Amaze – 2,552 units; City – 3,432 units; Accord – 113 units; and CR-V – 30 units.

Jnaneswar Sen, Sr VP - Sales and Marketing, HCIL remarked, "We are delighted to witness a remarkable growth of 35% over the previous year, although the market environment has been quite tough. Strong demand for Honda Brio and Honda City has been instrumental in achieving this success. The launch of Amaze in April will be a significant step in Honda's strategy to begin a new phase of growth for our business in Indian market." 

Toyota Kirloskar Motor (TKM) posted 19,452 units of sale in domestic market in March 2013, as against 18,220 units in the corresponding month in 2012, thereby registering a 6.8% growth. The company exported 1,691 units during the month. Total sales, including exports, adding up to 21,143 units, were up 11.1% y-o-y. 

Sandeep Singh, Deputy Managing Director and Chief Operating Officer, Marketing and Commercial, TKM, said “Despite the demand slowdown, we have registered a growth. The Etios and Etios Liva sold 8,637 units in March. The sales of Innova and Fortuner have also contributed to this growth. On the other hand, increase in excise duty on SUV’s and implementation of increased road tax in some of the states have helped clear the stock of pre-budget vehicles. The market continues to be slow, and is expected to remain sluggish in the coming months.”

Ford India sold 5,271 units in domestic market in March 2013, compared with 9,026 units a year earlier, while the exports stood at 2,228 units (3,122 units) during the month.

Ford India added one new export market – Gabon, in March. The Figo is now being exported to 36 international markets.

“Despite the difficult business environment this quarter, we have continued to build our brand in India with the launch of the Figo Celebration and the Endeavour ALL Terrain editions. We see the current downturn as cyclical and expect stronger sales growth in the future,” said Vinay Piparsania, Executive Director, Marketing Sales and Service, Ford India.

In March, Ford India launched the EcoSport Urban Discoveries campaign, its largest-ever consumer engagement programme, as it gears up for the launch of eagerly anticipated urban SUV – the Ford EcoSport.

The worst affected by the slowing economy, Tata Motors was stuck in negative terrain. The company registered a steep 66.2% fall in domestic sales of its passenger vehicles, which stood at 12,153 units in March 2013 vis-à-vis 36,006 units in March 2012.

Tata Motors’ commercial vehicle sales in domestic market aggregating 57,007 units also reflected a negative growth of 3.4% y-o-y.

Riding on the robust demand for its offering in SCV segment - Dost, Ashok Leyland posted a 3.1% increase in domestic sales of its CVs, which clocked 13,057 units in March 2013. Dost, growing by a whopping 90.5%, contributed 4,211 units, while domestic sales of M&HCVs were down 15.3% y-o-y to 8,846 units during the month.

Slowing momentum of two-wheeler sales was evident in March, as all two-wheeler majors in Indian market, except for HMSI and India Yamaha, registered negative growth.

Honda Motorcycle & Scooter India (HMSI) was the pick of the two-wheeler players once again, with its domestic sales at 239,849 units growing by 12.7% and exports rising by 68.6% y-o-y to 12,943 units in March 2013.

The market leader Hero MotoCorp continued to be under pressure, as the company’s domestic sales declined by 12.1% y-o-y to 451,396 units in March 2013. However, its exports at 16,887 units, posted a 14.6% uptick y-o-y.

Domestic sales of Bajaj two-wheelers also displayed a downward movement, dropping 13.7% to 181,492 units from 210,383 units a year ago.

While India Yamaha witnessed a 20% increase in domestic sales at 35,782 units in March 2013, TVS Motor and Suzuki Motorcycle slipped by 10.9% and 25.8%, respectively, during the month.

FY 2012-13 has been lacklustre for the auto market. The immediate recovery is nowhere in sight.  Headwinds in the form of slowdown in economy, inflation and high interest rates continue to persist. However, expected cut in interest rates and improvement in economic growth are likely to result in vehicle sales picking up momentum during the second half of FY’14.



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