Auto Market Hits Demonetisation Bump


Auto market in November 2016 virtually came to a screeching halt post demonetisation. With cash crunch and uncertainty gripping the auto market, retail vehicle sales were severely hit. The expectations of a resurgent November raised by the crackling sales during the festive season were belied, as a result. Total vehicle sales in domestic market at 1,563,665 units fell by 5.5% y-o-y during the month of November 2016.

Hot selling models save the passenger vehicle market’s blushes

The new models high in demand and commanding waiting periods for delivery came to the rescue of passenger vehicle market and helped the segment post a moderate growth of 1.8% in domestic sales that stood at 240,979 units in November 2016 as against 236,664 units in November last year.

Leader in the Indian passenger market, Maruti Suzuki India (MSI) reported domestic sales of 126,220 units in November 2016, which translated into a 14.1% growth over domestic sales volume of 110,599 units in November 2015. MSI’s exports were, however, down 11.3% y-o-y to 9,065 units during the month of November 2016. Thanks to the surging demand for Vitara Brezza, the growth was led by the company’s UV segment that witnessed a whopping 98.1% increase in domestic sales to 17,215 units in November 2016 from 8,688 units a year ago.

Hyundai Motor India Ltd (HMIL), the second largest player in the passenger vehicle market, sold 40,016 units in domestic market during November 2016, down 8.3% compared to 43,651 units sold in November 2015. Total sales of HMIL, including exports, aggregated 57,093 units, which reflected a 1.0% y-o-y drop.

Mahindra & Mahindra (M&M) registered domestic sales of 13,137 passenger vehicles (which includes UVs, cars and vans) in November 2016, down 32.8% vis-a-vis 19,662 units in November 2015. Demand in the rural market, which accounts for a sizeable volume for M&M, slumped due to the demonetization and consequent cash crunch.

Commenting on the November numbers, Pravin Shah, President & Chief Executive (Automotive), M&M, said: “While we expected an improved auto industry performance on the back of the festive season and other positive parameters such as rural demand and interest rates softening, the sudden announcement of demonetisation has brought in an immediate disruption and uncertainty. We at Mahindra are working with our network partners and customers by extending necessary help and support to minimise the challenges currently being experienced.”

Continuing its growth momentum on the back of sustained strong demand for Tiago, Tata Motors recorded sales of 13,633 passenger vehicles in the Indian market in November 2016, clocking a growth of 14.0% compared to 11,956 passenger vehicles sold in the same month last year.

Domestic sales of Toyota Kirloskar Motor (TKM) stood at 11,309 units in November 2016 – up 10.0% over domestic sales tally of 10,278 units in November 2015. The company exported 1,284 units of the Etios series in November 2016 compared to 1,110 units in November 2015.

N Raja, Director and Sr VP - Sales & Mktg, TKM, said: “November has been a very exciting month for us as we launched the new Fortuner. We are overwhelmed by the response it has received – over 6,200 bookings already. The sale of the new Fortuner almost doubled this month year-on-year. The Innova Crysta and the Platinum Etios have also done really well with the Crysta clocking more than 50,000 units in just six months of its launch in India. However, demonetisation has had its impact on our sales, as it has affected customer walk-ins at dealerships, order bookings and timely deliveries. To assist customers during this phase, we have introduced various cashless schemes like 100% on-road funding, payments through E-Wallet and PayTM to ensure smooth and hassle-free buying experiences.” 

Honda Cars India Ltd (HCIL) continued to witness slide in sales. The company’s domestic sales fell sharply by 45.4% to 8,029 units in November 2016 from 14,712 units a year ago. The City sedan was the company’s bestseller with 2,658 units, followed by Jazz with 2,655 units and Amaze with 1,971 units. Of the two SUVs, BR-V sold 419 units and CR-V, 21 units. The domestic sales tally for Brio and Mobilio read 202 units and 101 units, respectively, in November. The recently launched Accord Hybrid sold 2 units.   

“November saw major disruptions in the market due to the demonetisation and the cash crunch. We have taken several constructive steps to neutralise the impact of demonetisation, which includes squeezing the wholesales to avoid stock piling up at the dealerships. We believe that the situation will normalise in the near future and our sales performance will improve accordingly,” Yoichiro Ueno, President and CEO, HCIL, commented.

With sales of its compact sedan Ameo maintaining tempo, Volkswagen India sold 4,014 units in the Indian market in November 2016, as compared to 1,942 units sold in November 2015, notching up a whopping 106.7% growth.

Michael Mayer, Director, Volkswagen Passenger Cars India, commented, ”We have witnessed an encouraging growth with our November sales welcoming new members to the Volkswagen family. Earlier this year, we launched the Ameo and were positive that the vehicle would succeed in drawing car buyers’ attention and it has lived up to our expectations.” Also, the November marked an important milestone for Volkswagen India with the introduction of ABS and Dual Airbags as standard fitments across all Volkswagen carlines in India. 

Ford India saw its domestic sales decline steeply by 21.6% y-o-y to 6,876 units in November 2016. The company’s exports, however, stayed on growth curve, soaring by 67.4% y-o-y to 14,125 units during the month.

General Motors India posted a 13.5% increase in domestic sales that stood at 2,808 units in November 2016, vis-a-vis 2,475 units a year back. GMI’s exports also maintained the growth trajectory, rising by 45.8% y-o-y during the month.

Riding on its latest offering – RediGo, Nissan Motor India was in fast lane. The company’s domestic sales at 3,975 units in November 2016 grew by a healthy 51.9% y-o-y, while the exports registered a 4.2% decline to 8,182 units in November 2016 from 8,538 units in November 2015.

Renault India, driven by the strong demand for Kwid, recorded a 22.8% uptick in domestic sales at 9,604 units in November 2016, as against 7,819 units in November last year.

Cash crunch gives rise to Two-Wheeler woes

The two-wheeler sales took a severe hit as a result of the cash crunch arising from the demonetisation move. Total domestic sales of two-wheelers declined by 5.9% to 1,243,251 units in November 2016 from 1,320,552 units a year ago.

Numero Uno, Hero MotoCorp, reported domestic sales of 468,119 units in November 2016, which reflected a 13.0% decline, compared to 538,180 units in November 2015.

Honda Motorcycle & Scooter India (HMSI) was also in the negative terrain with the company’s domestic sales slipping by 4.0% to 299,414 units in November 2016 from 311,946 units in the corresponding month last year.

TVS Motor’s domestic two-wheeler sales at 191,499 units in November 2016 were flat, inching up by just 0.5% from 190,490 units a year ago.

Bajaj Auto posted a negative growth of 8.4% in its two-wheeler sales in the Indian market, which aggregated 139,765 units in November 2016, vis-a-vis 152,663 units a year ago. Bajaj two-wheeler exports stayed in reverse gear, de-growing by 17.1% y-o-y to 97,992 units in November.

Beating the demonetisation blues, Royal Enfield remained in top gear, witnessing an impressive 38.5% surge in domestic sales to 55,843 units in November 2016 from 40,312 units in November 2015.

Another two-wheeler major, India Yamaha Motor was in positive territory as well, the company’s domestic sales rising by 19.6% y-o-y to 51,106 units in November 2016.

Commercial Vehicles back in reverse gear

M&HCV sales showing promise in October after 3 depressing months went off-track again in November. The demonetisation took its toll on LCV sales as well. Total domestic CV sales at 45,773 units in November 2016 declined by 11.6% y-o-y, with both M&HCVs and LCVs slipping into negative terrain.

The CV market leader, Tata Motors sold 19,641 commercial vehicles in the domestic market during November 2016, down 16.0% vis-a-vis the domestic CV sales tally of 23,389 units a year ago.

VE Commercial Vehicles encountered a speed-breaker and posted a 17.1% fall in domestic sales, which added up to 2,408 units in November 2016, as compared to 2,905 units in November 2015.

Mahindra & Mahindra witnessed a 14.0% decrease in domestic CV sales to 12,724 units in November 2016 from 14,801 units a year back.

Ashok Leyland was the only CV major to have bucked the trends. The company’s CV grew by 7.8% y-o-y to 8,605 units in November 2016.

Auto market is currently going through an uncertain phase due to cash crunch and consequent slowdown in the entire chain of business activity. As a result, the new purchases are being kept on hold. The good thing is that macroeconomic indicators, otherwise, are encouraging. The auto market is expected to come back on track sometime in the second half of January 2017





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