Auto Market Groping for Sustainable Recovery

The auto market continued to encounter bumps during the month of August 2014. The month was a mixed bag for automobile makers; with some logging modest to spectacular growth, while others being stuck in the reverse gear, waiting for the festival season to perk up the sales. While passenger vehicle segment built on the moderate growth seen in the last three months, commercial vehicles stayed in the negative terrain, underlining the fact that the sustainable recovery remains elusive and may take longer time than expected to materialise.

Passenger Vehicles

Riding on the improvement in the business & consumer confidence in the wake of formation of strong Government at the Centre, passenger vehicles built on the sales momentum of the last three months, clocking a decent growth of 12.5% in domestic sales that stood at 213,915 units in August 2014 as against 190,086 units during the same month last year. However, fall in passenger vehicle exports by 11.4% to 53,055 units in August 2014 from 59,911 units a year ago, played a spoilsport moderating the growth number of total sales to 6.8% y-o-y during the month.

India's largest passenger car manufacturer Maruti Suzuki India (MSI) closed the month of August 2014 with a healthy  26.9% rise in its total sales (including exports), which aggregated 110,776 units, compared with total sales tally of  87,323 units a year back. The company’s domestic sales reading 98,304 units soared by 29.3% during the month from 76,018 units in August last year, while the exports at 12,472 units were up 10.3% y-o-y.

Maruti Suzuki’s sales in passenger cars segment, comprising brands like Alto, WagonR, Swift, Ritz, Dzire, Celerio and SX4, numbering 82,823 units were higher by 30.4% than an off-take of 63,499 units in the corresponding month of 2013.The domestic sales of utility vehicles including Gypsy, Grand Vitara and Ertiga moved up 20.3% to 5,491 units in August 2014 from the corresponding sales figure of 4,563 units in August 2013. The domestic sales in van segment comprising Omni and Eeco rocketed by 25.6% to 9,990 units from 7,956 units in the corresponding month of 2013.

Hyundai Motor India Ltd (HMIL), the second largest passenger vehicle player in the Indian market, saw its total sales (domestic & exports) decline by 8% to 48,111 units in August 2014 from 52,319 in the corresponding month last year. HMIL’s sales in the Indian market grew by a healthy 19.2% y-o-y to 33,750 units in August. The exports, on the other hand, plunged by 40.2% y-o-y to 14,361 units during the month. 

Commenting on the August sales, Rakesh Srivastava, Sr VP - Sales and Marketing, HMIL said, “Hyundai continued to build on the positive momentum with an overwhelming response for the new products such as Elite i20, Xcent and the Grand. We maintain a cautious optimism for a good festive season on the strength of new products, increase in demand for petrol cars and improving customer sentiment.”  

Honda Cars India Ltd (HCIL), remaining on a high-growth trajectory, registered domestic sales of 16,758 units in August 2014 witnessing a growth of 88% vis-a-vis 8,913 units sold in August 2013. HCIL also exported a total volume of 460 units during August 2014. The tremendous growth for the month was achieved on the strong sales momentum for the family sedan Honda Amaze and tremendous response for the newly launched stylish 7-seater MPV Honda Mobilio.

Jnaneswar Sen, Sr Vice President – Mktg & Sales, HCIL, commented, "We are extremely happy to witness consistent growth for Honda cars month after month. The festive season has already set in and will bring further cheer to the market. We are geared up for strong sales in coming months."

HCIL will resume the production of its best seller Honda City from 1st week of September 2014 and the car will now be manufactured at the Tapukara plant in Rajasthan. Earlier last month, HCIL also crossed the milestones of domestic sales of 1 lakh Amaze and 1 lakh units of cars powered by i-DTEC diesel engines.

Nissan Motor India’s domestic sales volume at 3,999 units in August 2014 witnessed a phenomenal growth of 60.3% y-o-y.

Another Japanese major, Toyota Kirloskar Motor (TKM), on the other hand, came up with a lacklustre performance and saw its local sales contract by 6.6% y-o-y to 11,215 units during the month of August 2014. TKM’s exports also declined sharply by 63.5% y-o-y to 1,171 units during the month.

Ford India sold a total of 14,092 vehicles (domestic and exports) in August 2014 - a 27.4% increase from 11,065 vehicles sold in August last year. The company's domestic sales were in a deceleration mode slipping by 15.1% y-o-y to 6,801 units. However, the exports surged by a whopping 138.5% to 7,291 units during the month from 3,057 units shipped out in August 2013.

Indian players – Mahindra & Mahindra and Tata Motors – continued their downhill drive.

Passenger vehicle sales of Mahindra and Mahindra (M&M) in domestic market dropped 15.5% to 15,321 units in August 2014 from 18,137 units a year ago. 

"In spite of our overall sales remaining flat in August, we continue to be optimistic due to the industry's enhanced business confidence which is reflected by the manufacturing sector showing signs of revival," said Pravin Shah, Chief Executive, Automotive Division & International Operations, Mahindra & Mahindra.

Domestic sales of Tata Motors’ passenger vehicles standing at 10,912 units in August 2014 were down 1.4% from 11,062 units in August last year.

Commercial Vehicles

Commercial vehicles continued to reel under the sluggishness in demand. The good news is that M&HCVs, after a prolonged dry spell, recorded a 9.6% y-o-y uptick in domestic sales that added up to 16,955 units in August 2014. However, LCVs remained on a sticky wicket, with domestic sales dropping by 12.2% y-o-y to 31,518 units during the month.

Ashok Leyland notched up a 10.9% growth in its domestic sales, which stood at 7,276 units in August 2014, compared with 6,562 units in August 2013.

Force Motors was another notable CV player to clock a growth of 9.2% with domestic sales volume of 1,740 units in August 2014.

Commercial vehicle sales of Tata Motors in domestic market at 23,006 units were lower by 14.0% y-o-y.

Mahindra & Mahindra registered a negative growth of 4.3% in domestic sales of commercial vehicles, which totaled 13,572 units in August 2014 as against 14,189 units in August last year. 

With domestic sales reading 2,571 units in August, Volvo-Eicher Commercial Vehicles was down 6.8% y-o-y.

Two-Wheelers

Two-Wheelers stayed on course to clock an impressive 19.2% sales growth in the Indian market. 

The market leader, Hero MotoCorp posted a 19.0% increase in domestic sales at 535,503 units in August 2014, as against 450,146 units a year ago. With exports growing by 134.6% to 23,106 units, the company sold a total of 558,609 two-wheelers during August 2014, as compared to 459,996 two-wheelers in the same month last year. 

Honda Motorcycle & Scooter India (HMSI) sustained its high growth momentum with a robust 27.2% y-o-y surge in domestic sales that numbered 370,871 units in August 2014. The company’s exports, however, dipped .5% y-o-y to 17,152 units during the month.

Growing at a fast clip, TVS Motor sold 188,631 two-wheelers in the domestic market during August 2014, which reflected a handsome 48.5% upswing vis-à-vis domestic sales figure of 127,007 two-wheelers a year ago. The company’s two-wheeler exports were also in fast lane, surging 26.9% y-o-y to 27,115 two-wheelers during August.

India Yamaha Motors clocked a decent 23.8% y-o-y uptick in domestic sales of its two-wheelers, which stood at 53,242 units in August 2014.

The month of August 2014 saw Bajaj Auto, Suzuki Motorcycle and Mahindra Two-Wheelers record negative growth in domestic sales.

While domestic sales of Bajaj two-wheelers were down 9.0% y-o-y to 137,347 units, the company’s two-wheeler exports at 146,955 units helped Bajaj Auto end up with a growth of 2.1% y-o-y in total two-wheeler sales during August 2014.

Uptrend in passenger vehicle sales has largely been driven by the prevailing sentiment. The party may be shortlived, if the economic indicators do not improve in the coming months. Continuing negative growth in CV sales is indicative of the fact that the economy is not out of the woods as yet. Worries on account of inflation remaining at the elevated levels, particularly in view of the patchy monsoon rains, persist, notwithstanding the fall in fuel prices. Unimpressive IIP numbers for July have added to the concerns. Automotive market is, therefore, keeping its fingers crossed.

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