Uncertainty Haunts Auto Market

The market remains muted despite uptick in passenger vehicle and commercial vehicle sales

The firm, all-round recovery of auto market from prolonged slump continued to elude the auto market in December 2015, due largely to rural slowdown. A positive for the market was that passenger vehicles and commercial vehicles sustained the growth momentum. However, after recording uptick in sales during October and November 2015, the two-wheelers in domestic market again slipped into negative terrain. Total domestic sales across various segments of the market, viz. 2/3-wheelers, passenger vehicles and commercial vehicles, at 1,502,314 units were down marginally by 0.2% year-on-year.

Year-end Discounts, benign fuel prices and softer interest rates drive passenger vehicle sales

December 2015 was a mixed bag for the passenger vehicle players, with leading carmakers like Maruti Suzuki India and Hyundai Motor India registering high double-digit growth , while a number of other players reporting a dip in sales.

The country’s car market leader, Maruti Suzuki India (MSI) clocked 13.5% growth in domestic sales to 111,333 units December 2015 over 98,109 units in December 2014. The entry level duo of the Alto and WagonR sold a total of 37,234 units in domestic market, up 7.5% y-o-y. Swift, Ritz, Celerio, Baleno and Dzire, comprising compact segment together reported domestic sales of 47,354 units, growing by 14.0% (December 2014: 41,532 units), with the new offering Baleno contributing significant numbers. In super-compact segment, Ciaz sales were down 23.9% with the carmaker selling 2,841 units (December 2014: 3,731 units). Utility vehicle sales, including the Gypsy, Grand Vitara, Ertiga and the S-Cross rose 58.8% to 9,168 units in December 2015 from 5,774 units a year ago. Meanwhile, domestic sales of the Omni and Eeco vans 11,122 units in December 2015 were 3.3% y-o-y.

On the other hand, MSI’s exports witnessed steep 33.1% fall from 11,682 units in December 2014 to 7,816 units in December 2015.

Hyundai Motor India Ltd (HMIL) posted record sales in December to notch its highest annual sales in 2015. The country’s second largest carmaker posted a 28.8% increase in domestic sales at 41,861 units in December 2015 vis-à-vis 32,504 units in December 2014. The company’s export, however, slid by 17.2% y-o-y to 22,274 units during the month.

Rakesh Srivastava, Senior VP (Sales and Marketing), HMIL, said: “With the strong performance of Grand i10, Elite i20 and Creta in December, Hyundai’s calendar year sales were an all-time high at 476,001 units with a cumulative growth of 15.7% and projected highest ever market share of 17.2%.”

Mahindra & Mahindra’s passenger vehicles including UVs, cars and vans) sold 18,197 units in domestic market during December 2015 (December 2014: 17,980), growing by just 1.2%.

“Inspite of a challenging external environment, we at Mahindra have closed December on a positive note. Having been encouraged with the positive response to our upcoming KUV100, we are excited about this compact SUV launch on  January 15, especially with our first mFalcon petrol offering,” Pravin Shah, President & Chief Executive (Automotive), M&M, said.

Passenger vehicle sales of another home-grown player, namely, Tata Motors in domestic market declined sharply by 33.0% to 8,044 units in December 2015 from 12,013 units a year earlier. While passenger cars saw domestic sales fall by 30.7% to 6,900 units, utility vehicles continued to go downhill, falling by 44.4% y-o-y to 1,144 units during the month. The company’s release said that the high base of December 2014 when the sales had increased abnormally in anticipation of increase in excise duty, impacted the growth numbers in December 2015.

Toyota Kirloskar Motor (TKM) posted domestic sales of sold 10,446 units in n December 2015, down 11.0% compared to 11,740 units in December 2014. The ban on registration of diesel vehicles with engine capacity of more than 2000cc in Delhi and NCR where Toyota has a significant presence, impacted the TKM’s sales numbers. The company also attributed the drop in sales to the floods in Chennai.

N Raja, Director and Senior VP, Sales & Marketing, (TKM) said, "We have seen a cumulative growth of 5% in calendar year 2015 when compared to sales in 2014. The growth would have been higher if we didn’t have to face few challenges like the ban on registration of diesel vehicles in Delhi & NCR and the flood situation in Chennai."

Likewise, another Japanese car major - Honda Cars India Ltd (HCIL) that also posted drop in domestic sales at 12,379 units in December 2015, which was lower by 14.2% compared to 14,428 units in the corresponding month in 2014. HCIL also exported a total of 364 units during December 2015. Model wise domestic sales break-up for HCIL stood as follows: Brio – 221 units; Jazz – 2,602 units; Amaze – 2,933 units;  Mobilio – 192 units; City – 6,366 units; and CR-V – 65 units.

Benefitting from the buoyant demand for its Kwid hatchback, Renault India reported a 160.2% jump in domestic sales at 10,292 units in December 2015 (December 2014: 3,956 units). In calendar year 2015, Renault India sold 53,847 units compared to 44,849 units in 2014, which marks a growth of 20.1%.

Ford India’s domestic sales for December 2015 stood at 5,924 units - up 57.8% over 3,754 units in December 2014. Ford India’s exports plunged 53.6% to 4,941 units from 10,647 units in December 2014. 

Continuing rural woes and flash floods in Chennai hit 2-wheeler sales

Two-wheeler sales in December 2015 were back in reverse gear  after trending positive in the previous two months. In addition to the uncertainty in rural economy, the floods in Chennai also played spoilsport. No. 1 and No. 2 two-wheeler players in India, viz.  Hero MotoCorp and Honda Motorcycle &Scooter India, accounting for about 70% of the two-wheeler market, witnessed fall in sales during the month. There was a 3.1% dip in total domestic two-wheeler sales, which stood at 1,167,633 units in December 2015 vis-à-vis 1,204,942 units a year ago.

The largest two-wheeler manufacturer, Hero MotoCorp Ltd (HMCL), reported sales of 476,665 units in December 2015 - down 6.0%  (December 2014: 506,632 units). While the company’s scooter sales in domestic market at 82,517 units witnessed a 10.7% uptick, the motorcycle sales dipped 8.0% y-o-y to 393,495 units during the month.

Honda Motorcycle & Scooter India (HMSI), which had registered consistent growth throughout the year, sold 290,540 units across the domestic territories in December 2015, registering a negative growth of 9.0% during the month, as against 319,349 unit in December 2014.  

Bajaj Auto’s domestic sales tally of two-wheelers stood at 120,322 units in December 2015, which represented a growth of 12.5% over 106,919 units a year ago. The company’s exports of two-wheelers, however, were in negative terrain, de-growing by 8.5% y-o-y to 127,420 units during the month.

TVS Motor Company registered domestic sales volume of 168,160 units in December 2015 vis-à-vis 159,918 units in December 2014, witnessing a 5.2% upswing. The company’s two-wheeler exports at 25,906 units during the month also moved up the growth curve by 5.5% y-o-y.

Royal Enfield finished the calendar year maintaining its healthy double-digit growth rate. The domestic sales of Royal Enfield grew by 42.1% to 40,037 units in December 2015 from 28,179 units in December 2014. 

LCVs slowly creeping up, while M&HCVs’ scorching pace slowing 

LCVs that had broken the vicious de-growth cycle in November 2015 recorded a 5.6% uptick in domestic sales at 30,823 units in December 2015. M&HCVs that had been witnessing a runaway growth during the past one year seem to be losing steam. Domestic sales of M&HCVs at 26,017 units posted a 19.3% increase, which looks a decent growth number on the face of it, but is way below the heady growth of over 30% clocked by the segment since the beginning of year 2015.

Tata Motors sold 27,372 CVs in the Indian market during December 2015, which marked a growth of 6.2% over the domestic sales volume of 25,763 units in December 2014. While domestic sales of Tata M&HCVs at 12,673 units were marginally higher by 1.9%, that of LCVs increased by 10.3% y-o-y to 14,699 units during the month.

Ashok Leyland’s domestic sales at 11,299 units in December 2015 witnessed a healthy 43.1% growth (December 2014: 7,898 units). 

M&HCV sales of M&M in the local market registered a massive 60.9% jump with the sales figures reading 589 in December 2015 vs 366 units in December 2014. Domestic sales of Mahindra LCVs at 11,876 units in December 2015 were, however, in negative territory, witnessing a marginal 1.0% drop year-on-year.

VE Commercial Vehicles recorded a strong 36.9% growth, selling 4,109 units in the domestic market in December2015 (December 2014: 3,002 units).

At a time when the vehicle sales were showing sign of picking up, the Hon’ble Supreme Court order banning registration of large diesel cars and SUVs in NCR has spelled uncertainty in the market. The good news is that LCVs have started picking up. However, industry analysts are keenly watching if the LCV segment manages to sustain the growth curve after persistence fall since 2013, as the tight financing norms on the back of rising delinquency levels are still in place.




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