Auto Market Driving Out of Demonetisation Slump

Vehicle sales are on recovery path and gradually driving back to the growth curve after embattling the demonetization blues, as the sales volumes for the month of February 2017 suggest. While passenger vehicles are gathering momentum, other segments of the market, though on a comeback trail, are still weighed down by the demonetization impact. Total domestic sales across all segments – passenger vehicles, commercial vehicles, 2- & 3-wheelers – stood at 1,719,699 units, clocking a measly 0.9% growth y-o-y.


Passenger vehicle sales gaining traction


The sales numbers for February 2017 reveal that passenger vehicle segment is fast making good the loss of traction, due to the impact of demonetization, in November and December 2016.  Passenger vehicle sales in domestic market grew by 9.0% to 255,359 units in February 2017 from 234,244 units a year ago. All major players in passenger vehicle market, barring M&M and GMI, posted positive domestic sales numbers.


Setting the pace, car market leader, Maruti Suzuki India (MSI) sold 120,599 passenger vehicles across various categories in the domestic market, clocking a growth of 11.5% over the domestic sales tally of 108,115 units in February 2016. The company’s mini segment comprising the duo of Alto and Wagon R, sold 33,079 units in February 2017 (February 2016: 35,495 units), down 6.8%. Domestic sales of sextet - Swift, Ritz, Celerio, Ignis, Baleno and Dzire – comprised in sub-compact segment, posted a 9.4% growth in February 2017 with domestic sales volume of 47,002 units (February 2016: 42,970 units). The domestic sales of Ciaz sedan at 5,886 units grew by 14% y-o-y. Thanks to the constantly surging sales of the Vitara Brezza, which crossed the 100,000-unit sales-mark in less than a year since its launch on March 8, 2016, the company’s UV sales (Gypsy, Ertiga, S-Cross, Vitara Brezza) in domestic market zoomed 110.5% to 17,863 units (February 2016: 8,484 units).


Hyundai Motor India registered domestic sales of 42,327 units in February 2017, witnessing a 4.0% uptick (February 2016: 40,716 units). The compact SUV, Creta recorded an all-time monthly high of 9,002 units, while the company’s exports at 10,397 units increased 15.4% y-o-y during the month.


The home-grown Tata Motors recorded domestic sales of 13,957 passenger vehicles, including cars, UVs and vans, in February 2017, which represented a 6.3% uptick vis-à-vis  13,135 units in February last year, due to continuing strong demand for Tata Tiago. The  recently launched lifestyle UV, Tata Hexa, has also generated a lot of buzz.


Meanwhile, another local player, Mahindra & Mahindra (M&M) posted negative growth of 13.1% in domestic passenger vehicle sales that added up to 20,605 units in February  2017, as against 23,718 units a year ago.


Commenting on the sales performance in February 2017, Pravin Shah, President and Chief Executive (Automotive), M&M, said, “The auto industry is seeing some positive trends emerging over the last two months. We also hope that the impending implementation of GST will provide a veritable boost to the auto industry and the economy in general.”


Honda Cars India Ltd (HCIL), after having been in negative terrain for over a year, bounced back, selling 14,249 passenger vehicles in the domestic market during February 2017, which marked a 9.4% uptick vis-à-vis domestic sales figure of 13,020 passenger vehicles in February 2016. HCIL’s sales tally was boosted by the new City sedan that was the best-selling car from Honda stable with 6,318 units, while Amaze was the next best with 3,924 units. Jazz clocked 2,758 units in domestic sales; Brio – 521 units; BR-V – 703 units; and CR-V – 25 units. HCIL also exported a total of 748 units in February 2017.


“The market has shown positive sentiment during February and HCIL has also benefitted from it. This month’s sales growth has been driven by an excellent response to the New Honda City 2017, which has received over 10,000 bookings so far,” Yoichiro Ueno, President and CEO, HCIL, commented.


Toyota Kirloskar Motor (TKM) reported 11.9% growth in domestic sales at 11,543 units during February 2017 (February 2016: 10,312 units). 


Commenting on the sales performance, N Raja, Director and SVP-Sales & Marketing, TKM, said, “Both the new Fortuner and Innova Crysta have been performing consistently, attributing to TKM’s domestic growth. The Fortuner, which has a more than 70 per cent segment share in the SUV segment, has sold 2,027 units in February, making it the highest ever sales for Fortuner in a month ever since its launch in India in 2009. The new Fortuner has sold over 8,200 units in the last four months. The Innova Crysta has also maintained its growth trajectory, selling over 67,500 units since its launch last year.”


Riding on its sub-compact Kwid, Renault India sold 11,198 units in domestic market in February 2017, up 26.8% over 8,834 units in February 2016.


Ford India turned in a stellar performance both in terms of domestic sales and exports during the month of February 2017. While the domestic wholesales grew by a whopping 49.6% to 8,338 uiits, the exports at 15,688 units were up 32.7% y-o-y.


“The industry is seeing some green shoots, recovering from the impact of demonetisation. Ford continues to grow faster than the industry, which bears testimony to our three-pronged strategy of product-led transformation, busting the myth of cost of service and enhancing dealership experience,” said Anurag Mehrotra, ED-Marketing, Sales & Service, Ford India.


Propelled by redi-GO, Nissan Motor India reported domestic sales of 4,807 units in February 2017, up 24.9% (February 2016: 3,850 units).


Two-Wheelers still Reeling under Demonetisation Impact


While there was a whiff of recovery from the demonetization blues, the two-wheeler sales were still muted. Total domestic sales of 2-wheelerss at 1,362,045 units in February 2017were flat, seen against 1,362,177 units a year ago. Two-Wheeler exports were, however, in fast lane, growing by healthy 19.3% y-o-y to 197,531 units during the month.


Two-Wheeler market leader, Hero MotoCorp’s domestic sales at 511,954 units in February 2017 were in negative terrain, slipping by 4.7% from 536,928 units a year back.


Ditto for TVS Motor that witnessed a 5.8% drop in domestic two-wheeler sales to 172,611 units in February 2017 (February 2016: 183,199 units).


Bajaj Auto also saw its two-wheeler sales in domestic market decline by 5.9% y-o-y to 142,287 units in February 2017. The company’s two-wheeler exports at 102,671 units during the month, however, notched up an impressive 22.0% y-o-y increase.


Bucking the subdued market sentiment, Honda Motorcycle & Scooter India (HMSI) reported domestic sales of 370,122 units in February 2017, up 5.3% (February 2016: 351,424 units). Commenting on HMSI’s performance in February 2017, Yadvinder Singh Guleria, SVP-Sales & Marketing,HMSI, said, “With the continued momentum of recovery after demonetisation, Honda has emerged as the first choice of Indian two-wheeler customers. This recovery period has been favourable for Honda, as we continue to grow with a 1.4% increase in domestic market share of 27.2%.


India Yamaha Motor registered sales of 68,104 units (including exports to Nepal) during February 2017, posting a 19.6% upswing (February 2016: 56,960 units).


Royal Enfield stayed in overdrive to clock a 19.3% growth in domestic two-wheeler sales that aggregated 56,737 units in February 2017 (February 2016: 47,567 units). The company remains the only two-wheeler brand that has remained unperturbed despite demonetisation.


With domestic sales volume of 33,641 units, Suzuki Motorcycle India witnessed a massive 44.5% uptick y-o-y.

BS-IV Pre-Buying Drive CV Sales Numbers


Pre-Buying rush to beat the deadline of 31st March 2017 before BSIV emission norms kick in all over the country, resulting in significant increase in CV prices, shored up the CV sales numbers in February 2017 that saw the domestic CV sales grow by 7.3% y-o-y to 66,939 units during the month.


Tata Motors’ domestic CV sales numbering 28,722 units in February 2017 were up marginally by 1.1%. According to the company, the MHCV Cargo segment demand has picked up due to pre-buying on account of expected price increase led by BS-IV implementation from 1st April. Tata bus sales continued to grow by 30% in February 2017, driven particularly by STU orders, supported by Intercity and Staff Application segments. Demand from schools is also gaining momentum.


Ashok Leyland witnessed a 6.4% increase in its total domestic CV sales to 13,236 units in February 2017 from 12,443 units in February 2016.


Mahindra & Mahindra sold 16,383 CVs in domestic market during February 2017, which reflected a 18.2% growth (February 2016: 13,864 units). While domestic M&HCV sales rose 47.3% to 813 units (February 2016: 552), the below-3.5T GVW products recovered strongly to notch up 16.8% growth at 15,094 units (February 2016: 12,919 units). The company’s CVs in the above-3.5T GVW segment did well to record 23% uptick with sales of 573 units (February 2016: 466 units).        


VE Commercial Vehicles posted a 13.2% growth in domestic sales that aggregated 4,828 units in February 2017 vis-à-vis 4,264 units in February 2016.


The auto market is recovering from the demonetization blow, as buttressed by the February sales numbers. However, the sales numbers, particularly in the case of commercial vehicles, three-wheelers and two-wheelers, may be bloated due to stocking by the OEMs at the dealerships to beat the price increase that the implementation of BS-IV emission standards will entail.

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