Rains Cheer Auto Market

The bountiful rains during the month of July 2016, after two successive years of drought, coupled with the positive announcement of clearance of the Goods and Services Tax (GST) Bill by the Rajya Sabha and Lok Sabha brought cheers for the Indian automobile market.

 

Overall, the auto market across vehicle segments grew by 13.2% with sales of 1,833,976 units in July 2016. M&HCVs, however, struck a jarring note, posting 7.6% fall in domestic sales.

 

Passenger vehicles stay on course

 

Riding on new models, passenger vehicles remained on growth trajectory. The Passenger Vehicle segment (cars, UVs and vans) posted its best results for both the ongoing fiscal and calendar year. Domestic PV sales volume at 259,685 units in July 2016 grew by 16.8% y-o-y, bettering domestic sales of 242,060, units, 231,640 units and 223,454 units clocked in April, May and June 2016, respectively.

 

After disruption in production in June due to fire at the plant of one of its vendors, the car market leader - Maruti Suzuki India (MSI) bounced back with a bang, notching up an impressive growth of 13.9% in domestic sales, which stood at 125,764 units in July 2016, vis-à-vis 110,405 units in July 2015.  With domestic sales of 5,162 units, Ciaz clocked a whopping 145.9% y-o-y growth, while Vitara Brezza led the charge for the company’s UVs to record an equally impressive 151.3% rise in domestic sales, which added up to 17,382 units in July 2016. On the other hand, domestic sales of  Mini segment, comprising Alto and WagonR, declined by 7.2% y-o-y to 35,051 units during the month.

 

Hyundai Motor India Ltd (HMIL) posted domestic sales of 41,201 units and exports of 14,606 units, during July 2016, which translated into year-on-year growth of 12.9% and 5.0%, respectively. Total sales, including domestic sales & exports, at 55,807 units in July 2016 were up 10.7% over 50,411 units in July last year.

 

Commenting on the July sales, Rakesh Srivastava, Sr Vice President - Sales and Marketing, HMIL, said, “Hyundai continues to sustain strong growth trajectory, on the strength of strong pull performance of Grand i10, Elite i20 & Creta in a market showing improved customer sentiments led by good monsoons, low inflation, reduced interest rates and dropping fuel prices.”

 

Home-grown UV major, Mahindra & Mahindra (M&M) sold 17,356 passenger vehicles, including UVs, cars and vans in domestic market during July 2016, as against 14,456 passenger vehicles in July 2015 - up 20.1%.

 

Pravin Shah, President & Chief Executive (Automotive), M&M commented, "We are happy to have achieved a decent growth in the midst of various regulatory challenges. The advent of a good monsoon so far has brought in positive sentiment for the economy and that is somewhat reflected in our performance. We are hopeful of a positive outlook during the rest of the financial year."

 

Another major domestic player in automotive space, namely, Tata Motors saw domestic sales of its passenger vehicles grow by a healthy 24.5% to 15,756 units in July 2016 from 12,652 units a year ago. Domestic sales of Tata passenger cars at 12,209 units in July 2016 were higher by 43.3%, compared to 8,520 units in July 2015, due to strong demand for the recently launched Tiago.

 

Toyota Kirloskar Motor (TKM) sold 12,404 passenger vehicles in the Indian market, registering 2.8% growth in July 2016 over the domestic sales of 12,070 passenger vehicles in the same month last year. The company exported 1,344 units of the Etios series in July 2016, vis-a-vis 1,629 units a year earlier. The recently launched Innova Crysta continued to grow with a waiting period of up to 2 months at different locations across the country.

 

“We had to shut down production at our Bidadi plant on 30th July on account of Karnataka Bandh in the absence of which our growth would have been more in terms of sales. Also, although the new Innova Crysta has been doing well, the ban on registration of diesel vehicles has stalled the extent of our growth,” commented N Raja, Director & Sr Vice President, Sales & Marketing, TKM.

 

Ford India's July domestic sales at 7,041 units in July 2016, vis-a-vis 4,362 units in July 2015, zoomed by 61.4%. The exports witnessed a 21.8% surge to 10,666 units in July 2016 from 8,754 units in July 2015.

 

Anurag Mehrotra, Executive Director, Marketing, Sales & Service, Ford India, said "Our product led-transformation strategy is paying dividends as we continue to meet the diverse needs of customers with the most vibrant, feature-rich and value-for-money product portfolio.”

 

Renault India, driven by the hot demand for Kwid, witnessed a spectacular 609.8% growth in domestic sales that stood at 11,968 units in July 2016, as against 1,686 units a year ago.

 

Nissan Motor India too was in fast lane, piggybacking the recently launched Redi Go. The company’s sales in the Indian market at 6,418 units in July 2016 soared by 125.9% y-o-y.

 

Meanwhile, Honda Cars India Ltd (HCIL) continued to witness slide in its sales. The company’s domestic sales plummeted by 24.6% y-o-y to 14,033 units in July 2016.

 

M&HCVs hit bump

 

With replacement demand tapering off, M&HCV sales in domestic market posted a 7.6% y-o-y decline in July 2016. This was the first fall for the M&HCV segment after a dream run for nearly 20 months on the trot. On the other hand, the green shoots of recovery seen in the LCV segment seem to be firming up with the LCVs posting 6.3% y-o-y growth in July 2016.

 

The CV leader in the Indian market, Tata Motors posted a negative growth of 1.7% y-o-y with its domestic commercial vehicle sales slipping from 22,424 units a year back to 22,033 units in July 2016. While domestic sales of LCVs at 11,335 units were up 6.8% y-o-y, those of M&HCVs were down 9.4% y-o-y to 10,698 units in July.

 

Rival, Ashok Leyland was also in negative terrain with domestic sales of the company’s commercial vehicles falling by 9.5% to 9,269 units in July 2016 from 10,237 units a year ago.

 

Volvo Eicher Commercial Vehicles (VECV), however, maintained the growth momentum. In the domestic CV market, Eicher branded trucks & buses clocked sales of 3,664 units in July 2016 (FYTD 17,266), as compared to 3,050 units in July 2015 (LFYTD 13,707), representing a growth of 20.1% (FYTD growth of 26.0%).

 

Mahindra & Mahindra (M&M) was in fast lane as well. The company’s CV sales at 13,168 units in the Indian market witnessed an 8.4% uptick vis-à-vis 12,148 units a year ago.

 

Two-wheelers maintain sales momentum

 

Thanks to the improvement in rural sentiment, the two-wheeler market posted a growth of 13.5% y-oy, selling 1,476,340 units in July 2016. While motorcycles sales comprised 897,092 units (+11.0%), surging demand for scooters saw the segment cross the 500,000 sales-mark for the first time this fiscal to reach 504,258 units in July 2016.

 

Hero MotoCorp Ltd (HMCL), the world’s largest two-wheeler manufacturer, sold 532,113 units of two-wheelers (including domestic sales & exports) in July 2016. This represents a growth of 9.1% over the corresponding month last year (July 2015), when the company had sold 487,580 units. The company’s domestic sales aggregating 520,559 units were up 11.9%. The exports on the other hand, witnessed a sharp 48.6% decline y-o-y to 11,554 units during the month.

 

In July, Hero MotoCorp commenced retail sales of Splendor iSmart 110 – the first motorcycle to have been completely designed and developed by its in-house R&D team at the state-of-the-art, world class Hero Centre of Innovation and Technology in Jaipur. The initial customer response to the new bike has been positive.

 

Honda Motorcycle and Scooter India (HMSI) continued to close the gap with the market leader Hero MotoCorp. HMSI clocked a 15.7% increase in domestic sales that stood at 429,551 units in July 2016 vis-a-vis 371,349 units during July 2015. With a tally of 309,170 units, Honda scooter sales in domestic market grew by a stellar 19.3% y-o-y in July 2016. The exports at 24,333 units propelled total sales of HMSI to 453,884 units in July 2016, helping the company cross 4.5 lakh sales mark for the first time.

 

TVS Motor Company reported an 18.7% uptick in domestic sales of its two-whelers, which stood at 206,605 units in July 2016, compared to 174,099 units a year ago.

 

Domestic sales of Bajaj two-wheelers grew by 21.3% to 174,324 units in July 2016, as against 143,671 units in July last year. The two-wheeler exports of Bajaj Auto at 111,203 units were, however, down 19.9% y-o-y.

 

Growing steadily, India Yamaha Motor posted a 11.6% rise, clocking 65,244 units of domestic sales, including Nepal, in July 2016 (July 2015: 58,477 units).

 

Royal Enfield remained in fast-forward mode, with the company’s domestic sales at 52,128 units growing by 30.8% y-o-y and exports surging by 40.0% y-o-y to 1,250 units in July 2016.

 

Though the auto market has been witnessing a remarkable pick-up in vehicle sales numbers during the last few months, the slowdown in M&HCV sales remains a concern. However, the above-normal monsoon rains and implementation of 7th Pay Commission recommendations inspire hope that the second half of the current financial year is going to be exciting for the auto market.

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