FY’14 Ends on a Sombre Note

Auto market remained depressed and continued to reel under sluggish demand, excise duty cut notwithstanding, during the month of March 2014. Even the year-end, when the operators and the companies normally go for the purchases to avail depreciation benefit failed to lift the sales numbers.

Uncertainty over economy, high interest rates and elevated fuel prices, coupled with weak sentiment, played the spoilsport yet again for passenger vehicles, buses and trucks. While passenger vehicles (including cars, UVs and vans) at 238,212 units witnessed a 7.30% drop in domestic sales, the CV sales in the local market, numbering 64,101 units plummeted by 24.6% during the month of March 2014.

Bucking the trends and slowdown blues, two-wheelers sustained their growth momentum, helping the auto market record a growth of 12.8% y-o-y in total domestic sales across all vehicle categories to 1,677,445 units during the month of March 2014, of which, two-wheeler sales growing by an impressive 21.2% y-o-y, accounted for 1,334,214 units.

Total vehicle sales in the Indian market during the FY 2013-14 encompassing all segments added up to 18,421,538 units, which represented a modest 3.5% growth over the previous year.

Car market leader Maruti Suzuki India (MSI) saw its domestic volumes fall by 5.2% to 102,269 units in March 2014 from 107,890 units a year ago. The company’s compact segment (Swift, Estilo, Ritz, Celerio) recorded 9.3% higher volumes at 28,285 units in March 2014 compared to 25,868 units in March previous year, thanks to the successful launch of Celerio. Decent performance of compact segment was weighed down by mini segment and super compact segment, which recorded y-o-y de-growth of 11% and 14.1%, respectively.  UVs and Vans witnessed muted y-o-y growth of 0.2% and 2.6% , respectively. Exports continued to be weak for MSI, falling by 8.0% to 11,081 units in March 2014 from 12,047 units a year earlier.

Hyundai Motor India Ltd (HMIL), the country’s second largest car manufacturer and the largest passenger car exporter, registered domestic sales of 35,003 units and exports of 16,705 units, with cumulative sales adding up to 51,708 units for the month of March 2014. While the domestic sales figure reflected a 3.4% uptick y-o-y, the exports fell sharply by 26.0% y-o-y during the month. Rakesh Srivastava, Sr VP - Sales and Marketing, HMIL attributed the growth in domestic sales during the month to the reduction of excise duty and the strong performance in compact segment.

Mahindra & Mahindra (M&M) recorded passenger vehicle sales of 23,433 units in domestic market during March 2014 as against 25,847 units a year back, registering 9.3% drop. While domestic sales of UVs declined by 7.1% y-o-y to 22,898 units, that of Mahindra cars plunged 55.8% y-o-y to 535 units during the month. 

"Post the reduction in the excise duty across all segments, the auto industry has seen the level of inquiry going up, but has not witnessed any major surge in sales," Pravin Shah, Chief Executive (Automotive Division), M&M said. He hoped that the buying sentiment would improve and change post the national elections, leading to an increase in demand. 

Honda Cars India Ltd (HCIL) continued to make rapid strides, posting its highest ever monthly domestic sales of 18,426 units during March 2014, which worked out to a growth of 83.4% over 10,044 units in March 2013. 

The company also clocked its highest ever annual sales of 134,339 units during FY 2013–14, recording a spectacular 83% growth over the previous financial year. The strong response from the market for the Honda Amaze and New Honda City has been the driving force for this record achievement. 

Jnaneswar Sen, Sr Vice President, Marketing and Sales, HCIL, said, "We are thankful to our customers for the great response we have achieved from them for our two big launches of Amaze and All New City during the past financial year. With both manufacturing plants in operation, as well as two new models, the stylish mid-sized MPV, Honda Mobilio and the all-new Honda Jazz due for launch this financial year, we look forward to another year of growth. We will increase our dealer network by 35% in this year by reaching out to more tier-2 & tier-3 markets." The company currently has network of 170 dealers in 107 cities in India. 

Impacted by the labour unrest at its Bidadi plant, Toyota Kirloskar Motor (TKM) witnessed a massive 57.8% decline in domestic sales to 8,206 units in March 2014, from the corresponding sales tally of 19,452 units a year ago. TKM’s exports at 956 units also plummeted by 43.5% y-o-y. N Raja, Senior Vice – President, Sales and Marketing, TKM, said “We started limited operations from March 18, 2014, with the help of our non-unionized team members, majority of whom are supervisors.”

Driven by its compact SUV, Ford EcoSport, Ford India saw a 20.6% jump in domestic sales at 6,356 units as against 5,271 units a year ago. Ford India’s exports too clocked a whopping 144.6% increase y-o-y to 5,449 units during the month.

“Cautious is how we should define the first quarter of 2014. The excise duty reduction has definitely been a positive step. As India gets set to vote, we look forward to such industry-friendly initiatives being sustained to support the important automotive sector,” said Vinay Piparsania, Executive Director - Mktg, Sales & Service, Ford India. “Ford is confident of playing a significant part in the next phase of growth in India’s automotive industry.” 

Nissan Motor India reported a 233.3% y-o-y rise in domestic sales to 7,082 units in March 2014, riding on the back of its newly launched entry-level small car Datsun Go.

Tata Motors' total sales (including exports) of commercial and passenger vehicles in March 2014 aggregated 51,184 units, while the domestic sales during the month added up to 45,996 units.

The domestic sales of Tata passenger vehicles inched up the growth chart for the second month running, increasing by a modest 2.6% y-o-y to 12,473 units in March 2014. On the other hand, commercial vehicle sales of Tata Motors remained in negative terrain with domestic sales falling by 41.2% y-o-y to 33,523 units.

The slowdown in economy also found reflection in the sales of other CV players. 

Ashok Leyland saw a steep 32.4% y-o-y decline in its CV sales in domestic market, which stood at 8,833 units. Mahindra Trucks and Buses witnessed a 17.4% contraction in domestic sales volume at 1,103 units in March 2014 vis-à-vis 1,335 units in March last year.  

Two-wheelers stayed on course, defying odds.

Riding on the festival of Gudi Padwa/Ugadi in West and South India and continuing robust demand for two-wheelers, Hero MotoCorp capped off the FY’14 with domestic sales of 505,771 units, growing by 12.0% y-o-y in March 2014.

Anil Dua, Sr Vice-President (Marketing & Sales), Hero MotoCorp said, “Our retail growth at seven per cent during FY’14 reiterates the confidence and trust that customers have in our products. FY’15 will be loaded with a slew of new launches, including many of the new products that we showcased at the recently concluded Auto Expo. We are gearing up for increased market demand for our products with the commissioning of the Neemrana plant in this financial year.”

Honda Motorcycle & Scooter India (HMSI) continued its spectacular run and ended the FY’2014 in style, clocking a whopping 56% growth in domestic sales at 374,226 units in March 2014, compared to the corresponding sales tally of 239,849 units in March last year.

Two-wheeler sales of TVS Motor in the Indian market at 165,482 units were up 15.5% y-o-y in March 2014.

India Yamaha Motor registered a growth of 29% in domestic sales to 46,052 units in March 2014 from 35,782 units a year ago.

Suzuki Motorcycle India saw the sales of its two-wheelers in India grow by 10.4% y-o-y to 28,521 units in March 2014.

Mahindra Two Wheelers Ltd (MTWL) reported a volume growth of 165.9% y-o-y in domestic market, selling 18,953 units during March 2014.

Bajaj Auto was the only two-wheeler player to have recorded a negative growth in the Indian market. Domestic sales of Bajaj two-wheelers numbered 169,869 units in March 2014, representing a 6.4% y-o-y decline. However, the company’s two-wheeler exports stayed on high growth trajectory, rising by 17.7% y-o-y to 100,709 units. Overall sales, including domestic and exports, were up 1.3% during the month.

The FY’14 was one of the worst years for the auto market in India. The industry is expecting to bounce back in the second half of current financial year upon formation of a stable Government after the general elections.


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