Auto Market Stays On Course Despite Headwinds

Vehicle sales in the Indian market maintained the growth momentum in May, albeit at a slower pace, despite continuing ban on registration of bigger diesel-fuelled cars in NCR and persistent rural concerns.  Total vehicle sales, across various segments, in domestic market grew by 9.9% y-o-y to 1,850,764 units during May 2016.

Passenger vehicle sales ride on new models and improved sentiment

Riding on new launches and encouraging macroeconomic indicators, passenger vehicles held their own, notwithstanding the continuing Supreme Court mandated ban on registration of larger diesel cars in NCR – an important market for automobiles contributing significant numbers to the sales volume. Domestic sales of passenger vehicles at 231,640 units in May 2016 recorded a modest growth of 6.3% vis-a-vis 217,984 units in May 2015. 

Maruti Suzuki India (MSI) witnessed a 10.6%  increase in domestic sales that stood at 113,162 units in May 2016, as compared to 102,359 units in May last year. The growth was driven by the Maruti Suzuki’s  SUV Vitara Brezza, which clocked 7,193 units, helping the company to register a whopping  144.2% surge in domestic sales of its UV segment from 5,567 units in May last year to 13,596 units in May this year. The domestic sales of Maruti Suzuki passenger cars, including Alto, WagonR, Swift, Ritz, Celerio, Baleno, Dzire, Dzire Tour and Ciaz inched up by 2.6% to 87,402 units vis-a-vis 85,190 units a year ago. Overall sales of MSI, including domestic sales as well as exports, saw a 7.1% rise to touch 123,034 units in May 2016, as against 114,825 units in May 2015. The company’s exports plummeted 20.8% y-o-y to 9,872 units during the month.

Hyundai Motor India Ltd (HMIL), the country’s second largest carmaker by volume, posted domestic sales of 41,351 units in May 2016, reflecting a growth of 10.4%, compared to 37,450 units sold in the same month last year. However, the exports at 11,805 units in May 2016 declined sharply by 21.6% from 15,064 units a year ago.

Rakesh Srivastava, Sr VP - Sales & Mktg, HMIL, said, “In market seeing challenges of stressed rural demand & uncertainty on diesel vehicles, Hyundai volumes grew by 10.4% with sales of 41,351 units, continuing the build-up of positive growth momentum on the strengths of strong performance of the three Indian Car of the Year brands Creta, Elite i20 and Grand i10 with heightened expectations of increase in demand on the predictions of good monsoon.” 

Mahindra & Mahindra (M&M), the home grown UV major, sold 19,635 units of passenger vehicles in the Indian market during May 2016, recording an 8.3% uptick over corresponding sales figure of 18,135 units in May 2015. 

Pravin Shah, President and Chief Executive (Automotive), M&M said, “We are happy to have achieved an overall growth of 11% during May 2016, in the midst of regulatory uncertainties. The favourable monsoon projections will definitely lead to improved buyer sentiment that would likely bring buoyancy in overall demand across all segments of the automotive industry. Going forward, we expect that our wider product portfolio will drive our growth. The continuing growth in our MHCV and Exports volumes is also encouraging. Further the upcoming e Verito launch, on June 2, will add a new and innovative product to our EV range. We hope that regulatory interventions will settle at the earliest to enable the auto industry to operate in a stable regime and contribute to the planned growth of India’s GDP.”

Another homegrown player, Tata Motors sold 9,456 passenger vehicles (including vans) in domestic market during May 2016 – 26.7% lower than the domestic sales of 12,908 passenger vehicles recorded in May last year. While the domestic sales of passenger cars at 7,787 units in May 2016 was lower by 15.1% y-o-y, UV sales declined by massive 58.9% y-o-y to 787 units during the month. 

Despite being affected the most by the ban on registration of large diesel cars in  NCR, Toyota Kirloskar Motor (TKM) put up a decent show, posting 9.6% growth in domestic sales at 12,614 units in  May 2016 vis-à-vis 11,511 units in May 2015, thanks to overwhelming response generated by Innova Cysta. 

“We launched the Innova Crysta that has already received close to 20,000 booking orders within a month of its launch,” N Raja, Director & Sr  VP, Sales & Mktg, TKM, said.

Honda Cars India Ltd (HCIL) registered domestic sales of 9,954 units in May 2016, as against 13,431 units in the corresponding month last year, registering a steep 25.9% fall, despite the launch of BR-V. City at 3,305 units was the top-seller for HCIL, followed by Jazz – 2,473 units, BR-V – 2,344 units, Amaze – 1,409 units, Brio – 228 units, Mobilio – 126 units, and CR-V – 69 units.

Renault India sold 8,343 units in the domestic market during May 2016, as against 3,601 units a year earlier, witnessing a strong growth of 131.7%. The cumulative sales figure of Renault India for the period Jan-May stands at 50,058 - up 163.4% y-o-y. Renault India has embarked on “an aggressive network expansion plan” to increase its sales points to 240 by the end of 2016 from the current 210.

Ford India saw domestic sales of its passenger vehicles grow by 14.7% to 5,780 units in May 2016 from 5,039 units in May last year. The exports at 11,499 units soared by 64.6% in May 2016, compared to 6,988 units in the same month last year.

“Ford continues to grow faster than the industry. Ford is focused on enriching value of ownership for Indian customers through transparent initiatives like Service Price Promise and Parts Pricing Calculator, which are now available on our website,” said Anurag Mehrotra, ED, Mktg, Sales & Service at Ford India. 

Volkswagen India sold 3,591 units in the domestic market, registering a decline of 13.8% y-o-y during May 2016.

Though positive in May, rural uncertainty still dogs two-wheeler market

The domestic two-wheeler sales clocked a growth 9.8% y-o-y to 1,515,556 units in May 2016. However, weak rural sentiment still besets the two-wheeler market, as seen from the unflattering domestic motorcycle sales numbers that crawled up by paltry 3.3% to 985,158 units in May 2016 vis-a-vis 953,311 units a year ago.

Hero MotoCorp Ltd (HMCL), the world’s largest two-wheeler manufacturer, sold 567,855 units of two-wheelers in the domestic market during May 2016, posting a measly 1.4% increase over 560,222 units in May last year. The company’s exports, on the other hand, grew by staggering 53.0% y-o-y to 15,262 units during the month.

According to the company, market demand was expectedly subdued in May, due to the heavy retail offtake that happened in April on account of the marriage season and regional festivals in different parts of the country during that month. Hero MotoCorp expects the good monsoon forecast for this year to lift the sentiment and bring about the turnaround of rural market in the second half of this fiscal.

Driving in fast lane, Honda Motorcyle & Scooter India (HMSI) witnessed a healthy 17.7% rise in domestic sales at 415,860 units in May 2016 vis-a-vis 353,409 units in May last year. The exports aggregating 20,468 units were also up by whopping 48.5% y-o-y.

Total two wheeler sales of TVS Motor increased by 13.0% to 238,320 units in May 2016 from 210,843 units in May 2015. Domestic two-wheeler sales clocked a 17.9% uptick from 175,533 units in May 2015 to 206,886 units in May 2016.

Bajaj Auto sustained the momentum in two-wheeler sales, posting domestic sales of 179,822 units in May 2016, as against 170,668 units in May 2015 – up 5.4%. The company’s two-wheeler exports, however, dropped 2.8% y-o-y to 127,522 units during the month.

Royal Enfield continued in top gear, notching up a growth of 36.4% in domestic sales of its motorcycles, which added up to 47,232 units in May 2016 vis-a-vis its domestic sales tally of 34,615 units a year ago.

Replacement demand, coupled with increased pace of economic activity, drives commercial vehicle sales

With infrastructure development and industrial & mining activities gradually gaining traction, commercial vehicles remained in fast lane. Domestic CV sales expanded by a decent 16.9% y-o-y to 57,089 units in May 2016. While domestic sales of M&HCVs at 24,951 units were up 21.0% y-o-y, LCVs, having recovered from the prolonged slowdown from the start of 2016, stayed on course to register a growth of 13.9% y-o-y to 32,138 units during the month. 

Tata Motors saw its domestic CV sales go up by 20.0% to 26,287 units in May 2016 over 21,910 units in May 2015.

Domestic CV sales of Ashok Leyland numbering 8,970 units were up 9.3% vis-a-vis 8,205 units a year ago.

Growing by impressive 30.1% y-o-y, Volvo Eicher Commercial Vehicles (VECV) increased its domestic sales volume from 3,617 units in May 2015 to 4,705 units in May 2016.

While the sales in May were somewhat subdued, the above-normal monsoon rainfall forecast by the Met Department is likely to cheer the market, especially the rural market, and lead to buoyancy in demand for all categories of vehicles. The impending implementation of Seventh Pay Commission will give further impetus to the vehicle sales.




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