Struggling Auto Market Shows No Sign of Picking Up

While the advent of new financial year brought fresh hopes in its wake, there was no respite for the auto market from the prolonged slump.  Despite cut in excise duties on motor vehicles in the interim Union Budget, the vehicle sales remained depressed in April 2014.

Domestic car sales in India dipped by 10.2% in April, the biggest monthly decline in a year, as negative sentiment due to subdued macro-economic environment, coupled with factors like high interest rates, volatile fuel prices and stubborn inflation, continued to plague demand. This was the steepest decline since May 2013, when car sales dropped by 11.7%. Domestic passenger car sales in April stood at 135,433 units in April as compared to 150,737 units in the year-ago month. In comparison, UVs were able to stem the slide and put up a somewhat better show, clocking a modest growth of 0.3% y-o-y to 40,680 units during the month. Sales of passenger vehicles, including cars, utility vehicles and vans, fell 9.5% y-o-y to 188,541 units in April 2014. 

Mirroring the tough macro-economic conditions, commercial vehicle sales in domestic market remained in reverse gear, falling by 24.0% to 43,080 units in April 2014 from the corresponding sales figure of 56,683 units a year earlier. While the M&HCVs continue to reel under economic slowdown, the negative growth has been moderating a bit of late. On the other hand, LCVs that shored up the sales numbers in CV space until a year ago have been witnessing precipitous fall. The domestic sales of M&HCVs dived 17.1% y-o-y to 15,429 units. The decline was as steep as 27.4% in the case of LCVs that stacked up domestic sales tally of 27,651 units during the month.

Three-wheeler sales in April 2014 declined by 2.2% to 33,602 units from 34,348 units in the same month last year.

However, the two-wheelers stayed on course and continued to buck the trend, growing by 11. 7% to 1,304,447 units in April 2014, riding on bullish rural demand. While scooter sales rose at an impressive pace of 26.1% to 329,680 units, the motorcycle segment indicated the return of momentum with an 8.1% y-o-y increase in domestic sales volume to 911,908 units during the month.

Strong showing of two-wheelers helped overall domestic vehicle sales, across all categories, grow by 7.0% y-o-y to 1,569,670 units in April 2014.

Maruti Suzuki India Ltd (MSIL), the largest car maker in the country, managed to sell 79,119 units in the domestic market during April 2014 compared to 90,523 units in April 2013, thereby posting a negative growth of 12.6%, despite the strong sales of the new offering Celerio. The company’s domestic sales in the compact segment, comprising Swift, Estilo, Ritz and Celerio, rose 9.9% to 23,659 units in April this year from 21,535 units a year ago. On the other hand, other segments, in which MSIL is present, did not have much to write home about. Domestic sales of mini segment cars, including M 800, Alto, A-Star and Wagon R, plummeted 25.4% to 26,043 units from 34,927 units in April last year. Local sales of its popular compact sedan Dzire declined 17.7% during the month under review to 16,008 units as against 19,446 units in April 2013. However, the company’s exports, growing moderately by 4.4% y-o-y to 7,077 units during the month, provided some relief. 

Rival Hyundai Motor India Ltd (HMIL) clocked an 8.8% increase in domestic sales at 35,248 units in April 2014, as compared to 32,403 units in April last year. However, the company’s exports were in negative terrain falling by a massive 39.0% to 14,974 units from 24,550 units in April 2013.

Rakesh Srivastava, Sr VP - Sales and Marketing, HMIL said, “Hyundai with a volume of 35,248 units has grown by 8.8% over last year, which is in line with this year’s objective of growth in volume and market share. Growth is led by sedan and utility vehicles across geographies, with new products Xcent, Grand and Santa Fe, adding volumes with an overwhelming response from customers. We foresee to maintain this positive momentum in this year by strengthening product portfolio and improving channel efficiencies.”

Mahindra & Mahindra (M&M) remained in the negative terrain, reporting a 12.5% y-o-y drop in its passenger vehicle sales in the domestic market to 18,148 units during April 2014. While the company’s domestic sales of 3-wheelers fell 12.5% to 3,532 units, CV sales at 12,427 units were down 17.8% y-o-y during the month.

Pravin Shah, Chief Executive, Automotive Division, M&M said, “It is unfortunate that the auto industry has not seen an upturn over the last couple of months in spite of a reduction in excise duty. We do hope that post the general elections, sentiments improve leading to a better economic situation and hence increased demand.”

Another homegrown player Tata Motors was also off-track, registering significant fall in sales volumes. The company reported total domestic sales of 30,670 units in April, a 35.6% decline compared to 47,595 units during April, 2013.

Passenger vehicle sales for Tata Motors at 7,353 units during April 2014 witnessed a 35.7% drop from the domestic sales figure of 11,437 units a year ago. 

Commercial vehicle sales of Tata Motors in domestic market aggregated 23,317 units in April 2014, down 35.5% y-o-y.

Economic slowdown found reflection in the sales volumes of other CV majors, including Ashok Leyland, as well. Ashok Leyland posted a negative growth of 20.9% y-o-y in its domestic sales that stood at 5,101 units in April 2014.

Toyota Kirloskar Motor (TKM) saw its sales in the Indian market decline by 16.0% y-o-y to 7,562 units in April 2014. The labour trouble at its Bidadi plant was one of the factors hitting the company’s sales. N Raja, Director and Senior Vice President, Sales and Marketing, TKM said, “We resumed normal production on 22nd April and were carrying out limited operations until then.”

General Motors India (GMI) continued to head southwards with its domestic sales diving by 35.3% y-o-y to 5,302 units in April 2014.

On the other hand, Honda Car India and Ford India consolidated further their position in the Indian market.

Riding on the significant contributions made by the new Honda City and Amaze to its sales tally, Honda Cars India Ltd (HCIL) was the star performer in the Indian car market once again. HCIL sold 11,040 passenger vehicles in the local market during April 2014, growing by a handsome 30.1% y-o-y. HCIL also exported a total volume of 402 units during April 2014.

Model wise domestic sales break-up of HCIL for April 2014 read as follows:  Brio -  578 units;  Amaze - 3,355 units; City -  7,044 units; and  CR-V -  63 units. 

“We have started the FY 2014-15 on a positive note and would like to thank our customers for the fantastic response to the new Honda City. We also celebrated the 1st anniversary of Honda Amaze by introducing the anniversary edition and we are confident of its good sales in this fiscal as well,” Jnaneswar Sen, Sr VP – Mktg & Sales, HCIL said.

Ford India too sustained the growth momentum, piggybacking on the tremendous success and acceptance of EcoSport in the Indian and overseas markets. The company witnessed a whopping 66.2% surge in its domestic sales to 6,651 units in April 2014 from 4,003 units a year back. Ford India’s exports also soared 103.4% y-o-y to 6,646 units during the month.

The two-wheeler sales sustained the growth momentum.

The two-wheeler market leader Hero MotoCorp recorded a 14.4% uptick in domestic sales of its two-wheelers, which added up to 558,556 units in April 2014 compared with 488,230 units in April 2013. Hero MotoCorp’s exports also rose by 14.8% y-o-y to 12,498 units during the month.

Honda Motorcycle and Scooter India (HMSI) continued to make long strides, posting a healthy growth of 21.1% in two-wheeler sales in domestic market to 301,978 units in April 2014 from 249,305 units a year ago. The company’s exports at 11,928 units were on course, representing a 15.8% rise y-o-y.

TVS Motor sold 158,893 two-wheelers in the Indian market in April 2014, growing by 11.3% over 142,794 units a year ago.

India Yamaha Motor stayed in fast lane. The company sold 51,154 two-wheelers in the Indian market during April 2014, up 42.4% over the corresponding sales figure of 35,927 two-wheelers a year back.

Bajaj Auto was in the negative zone. The company’s domestic sales of 166,874 two-wheelers in April 2014 reflected a 16.5% dip vis-à-vis 199,838 two-wheelers sold in April 2013. Bajaj Auto exports of two-wheelers remained on high growth trajectory, jumping by 31.5% y-o-y to 132,762 units during the month.

Suzuki Motorcycles India was another two-wheeler player to have witnessed a decline in its domestic sales that were down 10.8% y-o-y to 26,344 units during April 2014.

The vehicle sales continue to reel under the challenging economic environment and weak consumer sentiment. The market is betting on the new, strong Government at the Centre after the decisive verdict of general elections and hoping that it will improve sentiment, releasing the pent-up demand in the process.





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