Monsoon Concerns Weigh on Auto Market

Vehicle sales remained muted during the month of May 2015, as a result of faltering rural market due to uncertain weather conditions and challenging economic environment. The likely deficient monsoon rains this year predicted by the Met Department added to the concerns, prompting people, especially in rural areas, to defer their purchases. While commercial vehicles and passenger vehicles notched up modest positive sales numbers, two-wheeler and three-wheeler sales, continuing to encounter headwinds, were in negative terrain. Total domestic sales across various vehicle categories were down 0.6% y-o-y.

Passenger Vehicle Sales Stay on Course

Passenger vehicle sales in domestic market stayed on course to record a modest growth of 4.7% y-o-y to 217,671 units during the month of May 2015, thanks to the stability in fuel prices, gradually falling interest rates and pent-up demand. 

India's leading car manufacturer Maruti Suzuki India (MSI) reported a 13.0% increase in its domestic sales at 102,359 units in May 2015 compared to the domestic sales tally of 90,560 in the same month a year before. The company’s compact segment, comprising Swift, Ritz, Celerio and Dzire, clocked 41,926 units of domestic sale in May 2015, which is 5.7% lower than May 2014's 44,455 units.  Alto and WagonR, included in the mini segment, sold 35,062 units in the local market, representing a 20.6% increase over the corresponding sales figure of 29,068 units in May 2014. In the UV category (Ertiga, Gypsy and Grand Vitara) clocked 5,567 units (May 2014: 5,253), to post a 6.0% growth in domestic sales. Omni and Eeco continue to do well. Their combined domestic sales volume of 11,602 units in May 2015 rose 7.7% y-o-y. MSI exported 12,466 vehicles during the month, which was higher by 20.3% (May 2014: 10,365). 

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer, registered domestic sales of 37,450 units in May 2015, growing by 3.4% over 36,205 units sold in May last year. However, the company could not stem the slide in its exports that declined by 2.9% to 15,065 units in May 2015 from 15,513 units a year ago. 

Rakesh Srivastava, Senior VP - Sales & Mktg, HMIL, while commenting on the May sales said, "In a market experiencing low growth with decreasing contribution of rural and diesel vehicles sales, Hyundai  volumes grew to 37,450 units with the fourth consecutive month of more than 10,000 units of the Elite and Active sales.” 

Mahindra & Mahindra’s passenger vehicle sales, including UVs, cars and vans, in domestic market were down 6.9% to 18,135 units in May 2015 from 19,470 units in May 2014. 

Pravin Shah, President and Chief Executive (Automotive), M&M, said, “The auto industry has been showing signs of recovery and it is important that factors like interest rate cut if considered, would accelerate growth.” 

However, another homegrown player, Tata Motors came up with a much better showing, reporting a 21.2% increase in domestic sales of passenger vehicles to 11,090 units in May 2015 from 9,150 units in the same month last year. The growth was driven by the new offerings - Zest and Bolt and initial positive response to the new GenX Nano. The domestic sales of the passenger cars at 9,176 units in May 2015 were higher by 32.4%, compared to 6,932 units in May 2014. Tata Motors’ UV sales in domestic market continued to be in the rut, declining 15.0% y-o-y to 1,962 units during the month.   

Honda Cars India Ltd (HCIL) hit a speed-breaker, with its domestic sales at 13,431 units May 2015 just inching up a tad by 0.5% y-o-y. The model-wise domestic sales break-up was: Brio (873), Amaze (3,699), City (7,562), Mobilio (1,249) and CR-V (48).  The company also exported 655 vehicles during May 2015.

Toyota Kirloskar Motor (TKM) sold 11,511 units in the Indian market during May 2015 as against 11,831 units in May 2014, witnessing a negative growth of 2.7%. Total sales, including exports of 1,448 units of the Etios series, aggregated 12,965 units compared to 13,228 units in May 2014. TKM attributed the lower sales to the planned annual plant shutdown from May 29 to June 6 for regular maintenance. The new Camry launched on April 30, clocked 107 units of sale in May 2015, thereby registering a growth of 51% y-o-y. 

N Raja, Director and Senior VP - Sales & Mktg, TKM said, “The newly launched Camry has shown great success and acceptance by customers. The Camry Hybrid constitutes 91% of the total Camry sales in May.”

General Motors India (GMI) was stuck in the negative terrain, the company’s domestic sales falling steeply by 32.4% to 3,288 units in May 2015 ( May 2014: 4,865).

Ditto for another American player - Ford India that saw domestic sales plummet by 21.9% in May 2015 to 4,726 units, as against 6,053 units in the same month last year. The company’s exports, however, grew 12.1% to 6,988 units compared to 6,235 units in May 2014. 

Nissan Motor India registered domestic sales of 3,681 units in May 2015, witnessing a massive 26.7% de-growth. 

German carmaker Volkswagen India recorded a 56.8% y-o-y increase in domestic sales that stood at 4,167 units in May 2015. The company’s exports were down 33.0% y-o-y to 3,920 units during the month, though.

Faltering Rural Market Hits Two-wheeler Sales

Two-wheeler sales remained sluggish, owing to the uncertainty facing the rural economy as a result of the unseasonal/erratic rains. Slowing sales in the motorcycle segment has adversely affected the overall two-wheeler sales numbers, although the scooter sales continue to grow. During the month, two-wheelers recorded domestic sales of 1,380,950 units (May 2014: 1,398,376) declining by 1.25%. However, the domestic scooter sales at 364,073 units witnessed a 2.6% uptick y-o-y. 

The motorcycle sales were down with major players like Hero MotoCorp, Bajaj Auto and Honda Motorcycle & Scooter India (HMSI) showing downtrend in their respective motorcycle sales numbers for the month. 

Numero Uno Hero MotoCorp  (HMCL)  posted a negative growth of 4.9% y-o-y in domestic sales that added up to 560,222 units in May 2015.  The company’s exports were also down 24.0% y-o-y to 9,978 units during the month. Consolation for the company was that it has managed to consistently sell over five lakh units month-after-month despite slowing rural economy and moderating wages in the rural market.

Honda Motorcycle & Scooter India (HMSI) saw a modest 3.3% growth y-o-y, selling 353,409 two-wheelers during May 2015 in the India market. HMSI also witnessed a 2.9% uptick in exports to 13,787 units vis-à-vis 13,403 units a year ago.

Bajaj Auto saw yet another month of falling domestic sales of its two-wheelers, which slipped by 3.2% y-o-y to 170,668 units in May 2015. The company’s two-wheeler exports were also down 4.1% y-o-y to 131,194 units during the month.

In keeping with its consistent sales track record in the recent times, TVS Motor Company posted a growth of 3.5% in domestic sales of its two-wheelers, which increased from 169,671 units a year ago to 175,533 units in May 2015. The company’s two-wheeler exports were also on track, rising by a healthy 27.1% y-o-y to 35,310 units during the month.

Iconic motorbike-maker, Royal Enfield reported a 41.4% jump in total sales at 35,354 units in May 2015 (May 2014: 25,011). Domestic sales surged by 41.2% to 34,615 units during the month from 24,510 units in May 2014. 

Other two-wheeler players in the Indian market, viz. Suzuki Motorcycle India, Mahindra Two-Wheelers and India Yamaha Motors reported negative sales growth in May 2015. 

Base Effect Propels CV Growth

The sales of commercial vehicles in May 2015 followed a familiar pattern witnessed during the past one year. While M&HCVs posted a growth of 24.4% y-o-y in domestic sales, LCVs were stuck in the reverse gear, witnessing a 7.2% slide. 

Ashok Leyland is having a good run and saw its domestic sales soar 45.8% to 8,205 units in May 2015 (May 2014-5,629). 

Tata Motors continued to witness mixed results. While Tata M&HCVs notched up a decent 18.4% y-o-y rise in domestic sales that stood at 10,788 units in May 2015, LCV sales were down 19.5% y-o-y to 12,940 units during the month.

Mahindra & Mahindra reported a 51.7% growth in domestic sales of M&HCVs at 531 units in May 2015, as against 350 units in the same month last year. Domestic LCV sales in May stood at 10,876 units, down 9.0% y-o-y. 

VE Commercial Vehicles sold 3,617 units in the Indian market during May 2015 - up 18.01% y-o-y.

Uncertainty continues to grip the Indian auto market. Though the CVs and passenger vehicles are showing positive sale numbers, the growth has come about due largely to the low base. The forecast of deficient monsoon rains has not helped either. Auto market in India is keeping its fingers crossed.


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