No Respite for Auto Market

Auto sales continued to skid in June as most manufacturers reported fall in sales volumes, except for few that managed to grow on the back of new launches. 

There was no respite from the woes for passenger car and commercial vehicle segments, which have been reeling under severe slowdown for the last one year or so. Of late, two-wheelers and three-wheelers have also slipped into negative terrain. The sales figures for the month of June in respect of these segments were not flattering either.

The Indian passenger vehicle market continued its downward journey as car sales fell for the eighth consecutive month in June and medium and heavy duty vehicles registered a sixteenth straight month of year-on-year decline, reaffirming a deepening slowdown in the economy. 

The slowdown is all-pervasive and cuts across all categories, except for utility vehicles and scooters, which posted decent sales numbers and recorded year-on-year growth in June 2013.

Passenger car sales were down 9% to 1,39,632 units, two-wheeler sales declined 4.6% to 1.1 million units, and even the light commercial vehicle segment, which had been registering healthy growth till six months back, declined by 8.7%, pulling down the overall commercial vehicle market by 13.4% in June. What’s worse is that this fall is despite the numerous discounts and freebies doled out by various manufacturers. 

Auto majors including Maruti Suzuki, Tata Motors, Toyota Kirloskar and Mahindra & Mahindra saw decline in domestic sales, while Hyundai Motor India posted a marginal growth in June.  

Domestic sales volume of the largest car maker Maruti Suzuki India Ltd (MSIL) dipped 7.8% year on year to 77,002 units in June 2013. The fall in sales was seen across categories with even best-selling models such as Maruti Suzuki DZire and Ertiga taking a hit. The company’s exports at 7,453 units too registered a sharp 43% drop y-o-y.

On the other hand, Hyundai Motor India Ltd (HMIL) just scraped through to stay positive with a paltry 0.5% rise in its domestic sales at 30,610 units in June 2013 as against 30,450 units a year ago. HMIL’s exports were also more or less flat, growing by measly 0.6% y-o-y to 24,057 units during the month. 

Rakesh Srivastava, Senior Vice President, Sales and Marketing, HMIL said, “In these challenging times of industry de-growth, Hyundai has grown in volumes and market share on the strength of a strong product portfolio and customer focus of its channel partners.”  

Domestic passenger vehicle sales of the UV major, Mahindra & Mahindra (M&M) declined 12.9% in June 2013 to 17,232 units from 19,792 units in June last year. UVs that have been the mainstay of M&M posted a 17.7% fall y-o-y in domestic sales at 15,916 units during the month. 

Pravin Shah, Chief Executive, Automotive Division, M&M, said, “We have witnessed a de-growth in June amidst an overall decline in the auto industry. The month has been worse than May. We see challenging times ahead unless there are any short-term measures announced by the Government to bring some buoyancy.” 

Toyota Kirloskar Motor Ltd (TKM) too could not shrug off the slowdown blues. The company’s sales in Indian market plunged 25.1% y-o-y to 11,010 units in June 2013. The company’s exports at 2,795 units, however, witnessed a 14.5% uptick.

For Tata Motors, the slide continued, with its domestic passenger vehicle sales plummeting by 31.9% year-on-year to 11,549 units in June 2013. Reflecting sluggish economy, total CV sales of Tata Motors at 37,163 units in June were down 10.1% year-on-year.

Ashok Leyland did not have much to cheer about either, as its CV sales, including that of SCV Dost, dived 31.3% to 6,967 units in June 2013 from 10,416 units a year ago. ‘Dost’ that has been shoring up sales numbers of Ashok Leyland also witnessed 17.3% drop in sales y-o-y to 2,253 units during the month.

The launch of new cars such as Amaze and EcoSport gave a boost to monthly dispatches of Honda Cars India and Ford India, respectively. 

Ford India clocked a 14.2% increase in sales in Indian market to 7,145 units in June 2013 from 6,257 units a year ago. Ford India’s exports were on course to register a whopping 58.5% jump y-o-y to 1,623 units during the month.

“The surge in Ford India’s domestic wholesales and exports is a strong indicator of customers' acceptance of our quality products with smart features that they truly want and value. Going further with our global One Ford strategy to deliver great products, we’ve launched the Ford EcoSport at a compelling value for money proposition, offering a great power of choice to customers from several segments,” said Vinay Piparsania, Ford India’s Executive Director, Marketing, Sales and Service. 

Honda Cars India Ltd (HCIL) witnessed a phenomenal growth of 249% during June 2013, selling 9,297 units in domestic market, as against 2,667 units sold in June 2012. HCIL also exported a total volume of 761 units during June 2013. 

Model-wise break-up of domestic sales for HCIL during June 2013 read as: Brio – 2,375 units; Amaze – 4,965 units; City – 1,830 units; Accord – 27 units; and CRV – 100 units. 

Jnaneswar Sen, Sr Vice President – Marketing &Sales, Honda Cars India Ltd. said, "We are extremely delighted with the consumer response to Amaze, which has surpassed all expectations and is further gaining momentum. We already have more than 18,000 happy Amaze customers and we hope to add many more going forward." He added, “Owing to good customer response to our entire product line up, we have posted a growth of 45% in Q1 (April-June’13).”

Audi, the German luxury car manufacturer continued to maintain its growth momentum in the Indian luxury car market during the first half of the year with a sale of 4,846 cars during the period January to June 2013, recording a growth of 21% (January to June 2012: 4,000 cars). The company sold 750 cars in June 2013, a growth of over 4% (June 2012: 718 cars).

Two-wheeler majors, barring HMSI and India Yamaha, came up with muted sales performance in June.

Honda Motorcycle & Scooter India (HMSI) continued to make inroads into the two-wheeler market, recording year-on-year growth of 11.4% in domestic sales at 240,854 units. The company’s exports reading 11,202 units were up 7.0% in June 2013.

Hero MotoCorp, the numero uno in the Indian two-wheeler market for lone time, saw a 5.7% decline in domestic sales to 492,157 units in June 2013 from the corresponding figure of 521,810 units in June last year. The exports were also down 17.6% y-o-y to 10,122 units during the month.

India Yamaha sold 35,561 units in domestic market during the month of June 2013, reporting a year-on-year growth of 46.2%. The company grew its export volumes by 69.2% to 13,607 units during the month. The overall growth (domestic plus exports) stood at 52%.

Bajaj Auto saw its domestic sales of two-wheelers drop by 24.5% y-o-y to 159,688 units in June. The exports slipped 11.2% to 94,856 units. The company attributed a 20,000 unit loss of production to the strike at Chakan. 

TVS Motor Company reported a 7.1% fall y-o-y in domestic sales of its two-wheelers to 137,330 units, while the company’s two-wheeler exports grew by 14.1%  to 20,020 units.

Sluggish economy, coupled with downbeat sentiment, unrelenting inflation, high interest rates and volatility in fuel prices, has taken its toll on vehicle sales. Macroeconomic indicators are not enthusing enough to inspire hope and confidence that the market will return to the growth path soon. The only positive development that fuels hope of revival of auto market is that the the rain god is bountiful this year. With good monsoon coverage, leading to improvement in agriculture growth and fall in food inflation, the auto market may reverse the current downtrend in the second half of current fiscal. Till then, it is a testing time for the industry and the retail automobile trade.



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