A Chequered Year for Indian Auto Market

The Indian auto market started off on a promising note in FY 16-17, encountering bumps on the way in the second half. The total domestic sales, encompassing all the segments, posted an unflattering single-digit growth of 6.8% during the FY’17. The month of March saw a major disruption in the market with the Supreme Court ordering ban on sale of BS-III vehicles from 1st April 2017. The vehicle sales in the Indian market during the month of March 2017 were flat, crawling up by just 1.3% to 1,880,352 units from 1,855,623 units a year ago.

Passenger Vehicles maintain growth momentum

Passenger vehicles stayed on course to end up with a growth of 10.0% in domestic sales that stood at 282,519 units in March 2017 vis-à-vis 256,920 units in March 2016. Healthy sales in March 2017 helped passenger vehicles cross 3-million domestic sales-mark in a year for the first time.

The year saw car market leader, Maruti Suzuki India (MSI), achieve the 1.5 million sales landmark for the first time. The company ended up with highest ever total sales of 1,568,603 units and the highest ever domestic sales of 1,444,541 units during FY’17. In March, the company’s domestic sales at 127,695 units and exports at 11,590 units were up 7.4% and 10.9%, respectively, year-on-year. The consistent strong demand for Vitara Brezza and Baleno boosted MSI’s sales tally.

The second largest car manufacturer, Hyundai Motor India Ltd (HMIL) also witnessed record sales, crossing the milestone of 5 million units in domestic sales for the first time in a fiscal with a tally of 509,707 units during FY 2016-17. The company sold 44,757 units in March 2017, up 8.6% (March 2016: 41,201). The company’s exports grew by 5.9% y-o-y to 10,857 units during the month.

Commenting on the sales, Rakesh Srivastava, Director (Sales and Marketing), HMIL, said, ”The Grand i10, Elite i20 and Creta achieved record sales of over 10,000 units each in a single month. Highest-ever sales of 509,707 units in a fiscal year, creates a strong momentum for the next year.”

Mahindra & Mahindra (M&M), clocking 25,352 units of passenger vehicle sales in domestic market during March 2017, witnessed a 5.7% dip vis-à-vis 26,885 units in March 2016. M&M’s total domestic sales at 236,130 units in 2016-17 registered a flat growth (2015-16: 236,307 units).

Rajan Wadhera, President, Automotive Sector, M&M, said, “We are happy that our new brands are gaining traction as together KUV100 and TUV300 crossed the 100,000 sales milestone since their launch. However, the auto industry continues to see mixed reactions due to several external challenges and the more recent one being the unexpected verdict on the sale of BS III vehicles that has derailed many planned operations. Going forward, factors such as the likely softening of interest rates, revision in fuel prices, GST implementation and the Union Budget’s focus on rural are expected to bring back demand.”

Another home-grown player, namely, Tata Motors, however, notched up a whopping 51.7% growth in domestic passenger vehicle sales, clocking 17,093 units in March 2017, compared to 11,268 units a year ago.

Honda Cars India Ltd (HCIL) built up on the momentum of the last two months to post domestic sales of 18,950 units in March 2017, which translated into an 8.7% uptick vis-à-vis 17,430 units in March 2016. New models like the 2017 City sedan and the WR-V crossover were major contributors to overall sales. While Honda City with 6,271 units topped the sales for HCIL, WR-V with 3,833 units was the next best, followed by Jazz (3,527 units), Amaze (3,296 units), BR-V (1,436 units), Brio (540 units), Accord Hybrid (28 units) and CR-V (19 units).

Yoichiro Ueno, President and CEO, HCIL, said, “Strong sales momentum for our latest offerings in the market, the new Honda City 2017 and Honda WR-V, helped us achieve a good sales result during March 2017. We are confident of a strong show in 2017-18 with a robust product-portfolio and good demand from the market.”

Toyota Kirloskar Motor (TKM) sold 13,796 passenger vehicles in the Indian market in March 2017, registering a spectacular 80.6% growth (March 2016: 7,637 units). The company also reported 11.6% rise in total domestic sales during FY’17, which added up to 143,364 units, as against 128,494 units in FY’16.

Driving in fast lane, Ford India registered domestic sales of 8,700 units in March 2017, witnessing a 16.0% growth over 7,499 units in March 2016. Cumulative domestic sales of Ford India during the year 2016-17 aggregated 91,405 units - up 14.9% y-o-y. Total exports at 158,469 units during the year zoomed 42.9% y-o-y.

Nissan Motor India sold 5,309 vehicles in domestic market during March 2017, an increase of 21.3% y-o-y. The company’s total domestic sales of 57,300 units in FY 2016-17, witnessed growth of 45.5% y-o-y. It was the highest-ever volume achieved by the company in India. The company’s exports grew by 32.7% y-o-y to 12,928 units in March 2017, while the total exports at 109,459 units during the year were down 1.9% y-o-y.

Renault India’s sales in the domestic market at 12,188 units in March 2017 were down 1.9% y-o-y.

Clocking domestic sales volume of 4,792 units in March 2017, Volkswagen India recorded a healthy 34.2% growth. The company’s exports were also in fast lane, rising by handsome 38.9% y-o-y to 10,789 units during the month.

Two-Wheeler Sales Flat

Domestic two-wheeler sales at 1,471,576 units in March 2017 ended up flat, vis-à-vis 1,467,710 units a year back, inching up by measly 0.3%. Retail sales were, however, better due to heavy discounts and freebies offered by the OEMs and dealers for distress clearance of the BS III stock on the last two days of the month, necessitated by the Supreme Court order.

The world’s largest two-wheeler manufacturer for 16 years in a row, Hero MotoCorp rounded off the year with a paltry growth of 0.6% y-o-y in domestic sales that stood at 586,587 units in March 2017. In FY 2016-17, Hero MotoCorp clocked its highest-ever sales in a financial year at 6,663,903 units including exports), compared to 6,632,322 units it had sold in FY’16. The company created yet another significant industry benchmark by surpassing the landmark 6-lakh plus monthly sales on five occasions in a single year – March 2017 (609,951), October 2016 (663,153), September 2016 (674,961), August 2016 (616,424) and April 2016 (612,739).

Domestic sales of Honda Motorcycle and Scooter India (HMSI) at 338,856 units in March 2017 were in negative terrain, declining by 7.3% vis-à-vis 365,729 units in March 2016. However, HSMSI closed FY 2016-17 with all time high total sales of 5,008,103 units. HMSI gained 1% of the Indian two-wheeler market share, taking it to 27% during the year.  Honda 2-wheelers alone contributed 54% to the additional industry volumes. Honda two-wheeler exports grew by an overwhelming 41.7% from 200,114 units in FY’15-16 to 283,163 units in FY’16-17. 

Domestic two-wheeler sales of TVS Motor Company at 216,995 units in March 2017 were up 8.4% vis-à-vis 200,200 units a year ago.  The company’s total two-wheeler sales in domestic market during the year 2016-17 grew by 12.7% y-o-y to 2,489,773 units.

The Pune based Bajaj Auto reported a 14.3% decline in its domestic two-wheeler sales from 176,788 units in March 2016 to 151,449 units in March 2017. The company’s exports, on the other hand, witnessed 6.1% y-o-y increase to 92,786 units during the month. Notwithstanding its performance in March 2017, Bajaj Auto clocked 2,001,391units in domestic two-wheeler sales, growing by 5.4% y-o-y during the FY 2016-17.

India Yamaha Motor, which is also the fifth largest two-wheeler manufacturer in India, witnessed a 26.8% growth in domestic sales to 76,144 units (including shipments to Nepal) during March 2017, as against 60,032 units in March last year.

Continuing its impressive run, Royal Enfield  posted its best-ever domestic sales in March 2017, with a tally of 58,549 units, which reflected a 17.0% growth over 50,059 units in March last year. The company sold a total of 651,107 motorcycles in domestic market in FY 2016-17 vis-à-vis 498,791 units during the previous year, growing by 30.5%.

CV Sales Disrupted by the Supreme Court Order

While total domestic sales reported by OEMs in March 2017 showed a 9.3% uptick compared to March last year, the retail sales were hit by the Supreme Court order of 29th March, leaving a huge pile-up of inventory with the dealers.
Tata Motors sold 34,216 commercial vehicles in domestic market in March 2017, registering a 3.4% drop, as compared to 35,433 commercial vehicles sold in March 2016. Total domestic sales of Tata commercial vehicles during the year 2016-17 at 305,620 units registered just 0.5% uptick vis-à-vis 2015-16.

With a domestic sales volume of 17,508 units in March 2017, Ashok Leyland witnessed a growth of 13.4% over 15,445 units in March last year. For the FY 2016-17, the company’s domestic CV sales aggregated 133,264 units – up 4.7% y-o-y.

VE Commercial Vehicles posted a 7.8% increase in domestic sales of Eicher branded trucks and buses, which stood at 6,410 units in March 2017 vis-à-vis 5,944 units a year ago. The domestic sales figure for the year 2016-17 added up to 49,406 units, reflecting a 11.6% growth y-o-y.

M&M sold 22,908 commercial vehicles in domestic market in March 2017 – higher by 31.4% compared to 17,438 units in March last year. Total domestic CV sales of M&M during the year 2016-17 stood at 180,947 units – up 8.5% y-o-y.

FY 2016-17 held out the promise due to good monsoon after two consecutive years of drought, but was marked by periodic disruptions. The demonetization of high-currency notes, and the proceedings in Supreme Court, leading to the order restraining sale of BS III vehicles effective from 1st April put brakes on the growth momentum.




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