Advent of New Year Fails to Cheer Auto Market

The advent of the year 2014 made no difference. The Indian auto market continued to reel under a prolonged slump. There was no respite, as challenging economic environment, stubborn inflation and persistent high financing cost remained the bugaboos that have plagued the auto market for about two years now.

Car sales in India fell for the fourth straight month in January this year with a decline of 7.6% y-o-y to 160,289 units, while domestic sales of UVs, hit by higher excise duty announced in the 2013 Budget and rising diesel prices, witnessed a 6.3% drop y-o-y to 45,941 units during the month. Overall, passenger vehicle segment comprising cars, UVs and vans saw a 9.3% de-growth in the Indian market at 219,809 units in January 2014 vis-à-vis 242,460 units a year ago.

Commercial vehicle segment, bearing the brunt of slowdown in economy and mining & infrastructure development activities, in particular, saw no end to its woes, as the domestic sales slid further by 21.0% to 49,987 units in January 2014 from 63,218 units in the same month last year. The same was the case with three-wheelers, which registered a sharp 25.6% fall in domestic sales at 36,097 units in January 2014 as against 48,521 units in January 2013.

The exception was two-wheelers that stayed on growth path on the back of good monsoon and increased rural demand. Domestic sales of two-wheelers were up 8.9% y-o-y at 1,313,796 units in January 2014. The two-wheeler exports were also in fast lane, growing by a healthy 11.3% to 171,053 units in January 2014 from 153,699 units in the same month previous year.

Thanks to the substantial numbers contributed by two-wheelers, total sales in the Indian market, adding up to 1,619,689 units across all vehicle categories, managed to show a modest 3.8% increase year-on-year during January 2014. 

Reflecting the sluggish market, Maruti Suzuki India (MSI), the country's market leader in passenger vehicle segment,  reported a 10.3% decline in its total sales volume during January 2014  at 102,416 units as against 114,205 units in the same month last year. The company’s domestic sales declined by 6.3% during the month to 96,569 units from 103,026 units in January, 2013. Sales of mini segment cars, including M800, Alto, A-Star and WagonR, in domestic market dropped by 17.0% cent to 38,565 units as compared to 46,479 units in the year-ago month. The domestic sales volume of the compact segment comprising Swift, Estilo, Ritz increased by 1.9% y-o-y to 24,473 units in January, while that of its popular super compact sedan Dzire rose by 12.7% y-o-y to 19,232 units during the month under review. Domestic sales of utility vehicles, including Gypsy, Grand Vitara and Ertiga, stood at 4,763 units in January this year, down 21.9% from 6,095 units in the corresponding month last year. Exports of MSI during the month plunged 47.7% to 5,847 units from 11,179 units in January last year.

Hyundai Motor India Ltd (HMIL), the second largest car maker in India, posted a 2.6% dip in domestic sales during the month at 33,405 units as compared to 34,302 vehicles in January last year. HMIL’s exports were also in negative terrain, diving by 32.2% y-o-y to 12,008 units in January.

Tata Motors remained in reverse gear, registering a 33.9% decline in total vehicle sales to 40,481 units (including)  in January 2014 from the corresponding sales figure of 61,213 units in the same month last year. Domestic passenger vehicle sales of Tata Motors were down 28.0% to 10,846 units in January from 15,072 units a year earlier. Tata Motors sold 8,463 units of Nano, Indica and Indigo cars and 2,511 units of Sumo, Safari, Aria and Venture. In the commercial vehicles segment, domestic sales declined by 39.6% to 25,811 units from 42,708 units in the corresponding month of the previous year. Exports, however, were 11.4% higher at 3,824 units. 

Another homegrown player, Mahindra & Mahindra (M&M) also stayed in negative terrain, witnessing 11.5% decline in its total sales volume (including all vehicle categories and exports) at 42,685 units in January 2014 vis-à-vis the corresponding sales tally of 48,212 units in the same month previous year. M&M's domestic sales during the month stood at 40,324 units as against 47,840 units in January 2013, down 15.7%. The domestic sales of Passenger Vehicles segment (which includes UVs and Verito) accounted for 19,792 units in January 2014, contracting by 25.5% y-o-y. 

Commenting on the monthly performance, Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra said, “The first month of 2014 did not witness any improvement in the overall industry performance and the situation  remains subdued. The recent Repo Rate hike will in coming months escalate the rate of interest on car loans impacting consumer sentiment. We hope, Auto Expo will provide a trigger in giving a much needed boost to the auto industry and overall sentiment.”

Ashok Leyland’s sales figures were equally unflattering with domestic sales of its CVs plunging by 28.5% y-o-y to 7,037 units during the month of January 2014.

Honda Cars India Ltd (HCIL) started off the year 2014 in a celebration mood with highest ever monthly sales at 15,714 units in the local market during January 2014, riding on the success of the newly launched Honda City. This represented a whopping 188.3% growth over 5,451 units in the same month last year. HCIL exported 88 units during January 2014. 

The company also achieved the milestone of crossing 1 lakh units of sales for the first time during a financial year, the sales tally adding up to 101,370 units during April 2013–January 2014.

Model wise domestic sales break-up of HCIL during January 2014 read as follows: Brio - 1,015 units; Amaze  - 7,398 units; City – 7,184 units; and CRV  - 117 units.

Jnaneswar Sen, Sr Vice President – Marketing & Sales, HCIL said, “We have received an overwhelming response to new Honda City and the Honda Amaze continues to do strong sales. We would like to thank our customers for their constant support in achieving our highest ever monthly sales.” 

Ford India was another company that witnessed robust sales numbers in January 2014, clocking a steep 49.7% jump in total sales at 10,651 units in January 2014. Domestic sales at 6,706 units were up 10.6% y-o-y. The company exported 3,945 units in January 2014 as against 1,053 units in the same month previous year. "Ford has ushered in the new year on a note of growth and renewed commitment, and our commitment to India is not just business-centric,"  Vinay Piparsania, Executive Director (Marketing, Sales and Service), Ford India, said.

Nissan India reported 28.6% growth in domestic sales to 5,183 units in January 2014 from 4,088 units in January last year. 

On the other hand, another Japanese auto major, Toyota Kirloskar Motor (TKM) saw domestic sales dip by 18.1% y-o-y to 10,910 units in January 2014. "The market continues to be sluggish and the market sentiments remain low," N Raja, Senior Vice President, Sales and Marketing, TKM, said. 

Two-wheelers stayed on course and maintained the growth momentum, with most of the major players in the Indian market either recording growth or maintaining the sales numbers clocked last year.

Market leader Hero MotoCorp saw its domestic sales of two-wheelers inch up marginally by 1.1% to 554,059 units in January 2014 from 547,841 units  a year ago. 

Honda Motorcycle and Scooter India (HMSI) was, once again the pick of the pack, providing impetus to momentum and clocking a stupendous growth of 52.6% in domestic sales to 330,761 units and 2.3% increase in exports to 13,917 units in January 2014.

Chennai-based, TVS Motor witnessed a paltry 1.3% uptick in domestic sales of two-wheelers at 157,438 units in January 2014 as against 156,138 units sold in January previous year. Two-wheeler exports of TVS Motor at 23,438 units were up 34.7% y-o-y during the month. 

Domestic two-wheeler sales of Bajaj Auto at 167,869 units in January 2014 were 14.4% lower that the corresponding sales figure of 196,023 units a year back. The exports of Bajaj two-wheelers, however, grew by 7.8% y-o-y to 113,521 units during the month. Total sales tally of Bajaj Auto at 281,390 units was down 6.6% y-o-y during the month.

India Yamaha Motor posted a 6.8% y-o-y growth in domestic sales of two-wheelers at 31,801 units in January 2014.

While the year 2014 has started off on a dismal note, the auto market is pinning its hopes on the stimulus in the form of excise duty cuts announced in the interim Union Budget 2014. Auto market is also betting on new vehicle launches, many of which were unveiled at the Auto Expo 2014. The new launches and the reduction in vehicle prices arising out of the cut in excise duty are expected to unleash pent-up demand in the short term





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