Mixed Signals

 

After over two years of severe slowdown, auto market seems to be coming back on track slowly, riding largely on upbeat mood created by the formation of the new Government at the Centre, as the sales data for the month of July suggests. There are straws in the wind, which lend credence to the optimism. However, uncertainty continues to dog the market, as the green shoots are not all-pervasive and commercial vehicle sales remain in negative terrain.

Passenger Vehicles

In what comes as a positive sign and relief for the auto market, the sales of passenger vehicles grew for the third month in a row. Domestic sales volume of passenger vehicles posted a 6.5% rise to 199,435 units in July 2014 from 187,234 units a year ago. Though the growth came about on the back of new launches,  excise duty cut and discounts, positive growth numbers for three consecutive months do signal a slow recovery in the automobile market that has been bleeding under a prolonged slump.

Leading the charge in passenger vehicle space, market leader Maruti Suzuki India (MSI) reported 19.9% increase in domestic sales at 90,093 units in July 2014 over 75,145 units in July last year. The sales were driven mainly by the compact segment - comprising Swift, Celerio, Ritz - which rose 81.2% y-o-y to 25,156 units during the month, thanks to significant contribution of Celerio to the sales tally. Domestic sales of MSI’s popular compact sedan Dzire surged by 22.2% in July to 18,634 units as against 15,249 units a year ago.

The rival Hyundai Motor India Ltd (HMIL) posted a growth of 12.7 % in its domestic sales at 29,260 units as compared to 25,965 units in the same month last year. During the month, HMIL’s exports declined 17.6% to 18,739 units from 22,739 units a year ago. The company’s total sales (domestic + exports) at 48,014 units in July 2014 were marginally down 1.4% y-o-y.

Commenting on the July sales, Rakesh Srivastava, Sr VP - Sales & Mktg, HMIL, said, “The demand pull created by the successful product launches and strong channel spread has brought down the discounts and the green shoots of growth are visible with the stabilization of macro-economic factors and near to average monsoons.”

Maintaining the growth momentum, Honda Cars India Ltd (HCIL) recorded a handsome 39.4% growth in domestic sales to 15,709 units in July 2014 from 11,223 units in July last year. Modelwise domestic sales break-up of HCIL for July 2014 read: Brio – 74 units; Amaze – 4,507 units; Mobilio – 3,365 units; City – 7,705 units; and CR-V – 58 units. HCIL also exported a total volume of 858 units during the month.

Jnaneswar Sen, Sr VP – Mktg & Sales, HCIL, said, “We are extremely happy with the progress we have made in this year. Our recently launched Honda Mobilio has received good response from the market with over 10,000 bookings since its launch and we are confident that it will attract more customers with its strong desirable values.” 

Toyota Kirloskar Motor (TKM) registered total sales (domestic + exports) of 13,847 units in July 2014 compared to 14,470 units in July 2013, witnessing a 4.3% de-growth. The company’s sales in the Indian market inched up by 3.5% to 11,921 units, while exports fell sharply by 34.8% y-o-y to 1,926 units during the month.

“Both the Corolla Altis and the Etios Cross have been well accepted by the customers, especially for QDR – Quality, Durability and Reliability. We sold 882 units and 888 units of Corolla Altis and Etios Cross, respectively. The Innova & Fortuner also continue to maintain their leadership positions in their respective segments. We look forward to a further improvement with the beginning of the festive season,” said N Raja, Director and Sr VP, Sales and Marketing, TKM.

General Motors India (GMI) saw a 27.3% slide in July sales at 4,726 units (including 6 units of exports) as against 6,503 units sold in the same month last year. The July 2014 sales of GMI included 1,563 units of Beat, 1,222 units of Tavera and 812 units of Chevrolet Enjoy.

P Balendran, Vice President, GMI, said: "The buoyancy in the market is still missing because of high interest rates and high fuel prices. An insufficient monsoon is also affecting sales of small cars in rural areas and tier II cities."

Another American subsidiary, Ford India performed somewhat better on the back of continuing healthy demand for its compact SUV – EcoSport. Ford India sold 15,282 vehicles in combined domestic sales and exports in July 2014, a 24% increase from 12,338 vehicles sold in July 2013. The exports during the month grew to 7,690 vehicles from 4,471 vehicles a year ago, while domestic sales at 7,592 units slipped by 3.5%  from to 7,867 units sold in July last year.

“There are several indicators to suggest a gradual revival in customer sentiment in the past few months, including cues from the stock market and a steady improvement in manufacturing index,” said Vinay Piparsania, Executive Director - Marketing, Sales and Service, Ford India. “As we approach the festive season, we expect a significant increase in footfalls at Ford showrooms across the country. We have improved supplies to expedite deliveries for all our models, including the bestselling EcoSport, to meet the expected rise in demand in the coming months.”

Home-grown auto majors, namely, Tata Motors and Mahindra & Mahindra continued to underperform in the absence of new offerings from their stable.

Tata Motors, staying in reverse gear, saw domestic sales of its passenger vehicles drop by 11.2% to 9,068 units in July 2014 from 10,217 units a year earlier. The company is banking upon its new compact sedan Zest that has been launched on August 12 for a turnaround in its fortunes.

Mahindra & Mahindra (M&M) witnessed a 5.3% drop in domestic sales of passenger vehicles, which stood at 14,708 units in July 2014 vis-à-vis 15,530 units a year earlier. While domestic sales of Mahindra UVs at 14,348 units were down 1.1%, that of cars plummeted by 64.9% y-o-y to mere 360 units during the month.

Commercial Vehicles

There was no respite for the beleaguered commercial vehicles that continued on downhill drive. Domestic sales of commercial vehicles, a barometer of economic activity in the country, fell 13.6% y-o-y to 47,765 units during the month of July 2014. While the negative growth rate of M&HCVs has been tapering off for the last few months, LCVs are still stuck deep in the negative territory.

Tata Motors clocked a 29.2% decline in sales of its commercial vehicles in the Indian market, which stood at 26,188 units in July 2014 as compared to 36,974 units a year ago. The saving grace for the company was that it managed to somewhat stem the slide in domestic sales of M&HCVs, which aggregated 9,725 units in July 2014, translating into just 0.3% drop y-o-y.

Ashok Leyland’s sales in the local market were down 13.4% y-o-y to 6,933 units in July 2014, while exports at 884 units grew by 25.6% y-o-y during the month.

On the other hand, domestic sales of Volvo-Eicher Commercial Vehicles numbering 2,955 units in July 2014 increased marginally by 1.4% y-o-y. 

Two-Wheelers

Staying on course, two-wheelers notched up decent growth of 13.7% in domestic sales that added up to 1,287,462 units in July 2014 as against 1,132,066 units a year ago.

The numero uno Hero MotoCorp held on to its vice-like grip, selling 516,661 two-wheelers in domestic market in July 2014, which represented a 8.3% uptick year-on-year.

Honda Motorcycle & Scooter India (HMSI) continued to make rapid strides. The company’s domestic sales tally of 363,977 two-wheelers in July 2014, as against 276,195 two-wheelers sold a year ago, reflected a healthy growth of 31.8%.

TVS Motor also clocked an impressive 30.1% rise in domestic sales of its two-wheelers, which stood at 164,571 units in July 2014, compared to 126,531 units in July last year. The company’s performance in exports was equally spectacular. The two-wheeler exports at 29,557 units were up 46.8% y-o-y.

Gradually catching up with the big league, India Yamaha Motors was another two-wheeler, which recorded a robust growth of 34.1% y-o-y, selling 50,286 units in domestic market during the month of July 2014. 

Among the major two-wheeler players, Bajaj Auto was an exception. With domestic sales volume at 125,053 units in July 2014, the company recorded a negative growth of 18.4% y-o-y. However, Bajaj Auto continued to consolidate its position on export front, clocking a whopping 52.5% y-o-y growth in overseas sales that stood at 142,788 units.

Indian automotive market has slowly set out on a road to recovery after nearly two years of demand uncertainty in the domestic market. However, commercial vehicles are bogged down by the poor demand. Hopefully, the steps being taken by the Government to impart pace to the economic activity will soon translate into the action at the ground level, leading to revival in CV sales.

 

 

 

 

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