Ban on BS III Vehicle Sales Takes a Toll on Commercial Vehicles

As expected, the Supreme Court order banning sale of BS III vehicles put a brake on commercial vehicle and 3-wheeler sales in April 2017. However, passenger vehicle and 2-wheeler segments, not so much affected by the ban, notched up good sales numbers. Total domestic sales encompassing passenger vehicles, 2/3-wheelers and commercial vehicles grew by 6.8% y-o-y to 2,030,476 units during the month.

Passenger vehicles in overdrive

Maintaining its growth momentum, the Indian passenger vehicle market began the new fiscal on a robust note. Domestic sales of passenger vehicles, comprising cars, UVs and vans, stood at 277,602 units in April 2017, translating into a healthy growth of 14.7% over 242,060 units a year ago. Buoyancy in passenger vehicle sales was driven by new models, refreshed variants and an improvement in consumer sentiment, resulting in increased footfalls in the showrooms and higher sales.

Maruti Suzuki India (MSI), the country’s largest carmaker, carried forward the vibrancy of FY2016-17 to April 2017, selling 144,081 units in domestic market and witnessing a heady 23.1% growth (April 2016: 117,045 units) in the process. The company’s entry level, bread-and-butter duo of Alto and Wagon R, back on growth curve, sold 38,897 units in domestic market, which represented a 21.9% surge vis-à-vis 31,906 units in April 2016. Domestic sales of the six compact cars comprising Swift, Ritz, Celerio, Ignis, Baleno and Dzire posted a robust 39.1% growth at 63,584 units during the month (April 2016: 45,700 units). Thanks to the galloping sales of Vitara Brezza, MSI’s UV sales (Gypsy, Ertiga, S-Cross, Vitara Brezza) rose 28.6% to 20,638 units in April 2017 from 16,044 units in April 2016. However, the company’s exports witnessed a sharp 29.4% decline to 6,687 units in April 2017 vis-à-vis 9,469 units in April last year.

Hyundai Motor India Ltd (HMIL), the country’s second largest car manufacturer, posted domestic sales of 44,758 units in April 2017, up 5.7%, compared to 42,351 units in April 2016. Commenting on the April 2017 numbers, Rakesh Srivastava, Director (Sales and Marketing), HMIL said, “Hyundai with a volume of 44,758 units continued its growth momentum on a strong base of last year, driven by a tremendous response to the new Xcent and strong performance of the Grand i10, Elite i20 and Creta.” HMIL’s exports performance was none-too-enthusing, falling by 3.8% y-o-y to 11,610 units during the month.

Riding on the robust demand for new Fortuner and Innova Crysta. Toyota Kirloskar Motor (TKM)  reported whopping 52.0% growth in April 2017 with domestic sales tally of 12,964 units (April 2016: 8,529 units).

N Raja, Director and Sr Vice President, Sales & Marketing, TKM, commented, “We have been able to sustain robust growth in the month of April 2017.  This growth has been propelled by the overwhelming response the new Fortuner has received. The launch of new Fortuner has helped us up this ante as it has already sold more than 12,200 units in less than 6 months of its launch. Considering the segment in which the Fortuner is present, this is a great achievement for us.”

Mahindra & Mahindra (M&M), registering domestic sales volume of 19,325 passenger vehicles in April 2017, was down 15.0% (April 2016: 22,655 units). “We are hopeful that the new financial year will bring in positive sentiment for the automotive industry with the key demand drivers in place. Factors such as the ongoing infrastructure development initiatives, outlook for a normal monsoon and the expectation of a stable policy environment will fuel growth in the coming days. Going forward, we are looking for a good growth momentum with our planned refreshes during FY2018,” Rajan Wadhera, President, Automotive Sector, M&M, said.

Another home-grown player, Tata Motors, however, came up with an impressive performance, clocking a 15.0% uptick in domestic passenger vehicle sales that added up to 14,066 units in April 2017 as against 12,230 units in April 2016. The growth was propelled by continuing strong demand for Tata Tiago and enthusing response to new offerings – Tata Tigor and Hexa.

Honda Cars India Ltd (HCIL) posted domestic sales of 14,480 units in April 2017, up 38.1% over 10,486 units in April 2016. Honda City continued to be the best-selling car for HCIL with 5,948 units, followed by the WR-V (3,266 units), Jazz (2,061 units), Amaze (2,029 units), BR-V (701 units), Brio (438 units), CR-V (36 units) and Accord Hybrid (1 unit). HCIL reported to have received over 25,000 bookings for Honda City since its launch in mid-February, and 12,000 bookings for WR-V since its launch in mid-March.

Meanwhile, Ford India was in fast lane, witnessing a healthy growth of 16.6% in domestic passenger vehicle sales that stood at 7,618 units in April 2017 (April 2016: 6,531 units). In April, the carmaker introduced Sports Editions of its Figo hatchback and Aspire compact sedan to give further push to its sales. Ford India’s export numbers were also impressive, soaring by 76.4% y-o-y to 17,531 units during the month.

The German carmaker, Volkswagen India was on a high-growth trajectory as well, with the company’s domestic sales growing by 20.9% y-o-y to 3,673 units in April 2017. The company’s exports, though clocking decent numbers, were down 2.6% y-o-y to 7,666 units during the month.

Two-Wheelers Remain on Course

Two-Wheeler sales remained steady, thanks to growing scooterisation, improving rural sentiment and forecast of normal monsoon. Total two-wheeler sales in the Indian market at 1,674,796 were up 7.3% y-o-y.

The pick of two-wheeler players was Honda Motorcycle and Scooter India (HMSI) that made a big stride forward to close the gap with the market leader Hero MotoCorp. On the back of consistently growing demand for its Activa range of scooters, HMSI witnessed a stupendous 33.3% surge in domestic sales at 551,732 units, which was shy of just around 34,000 units from the corresponding sales tally of 585,655 units clocked by Hero MotoCorp. HMSI’s exports were also in overdrive, zooming by 58.7% to 27,045 units in April 2017 from 17,040 units a year ago.

Yadvinder Singh Guleria, Sr Vice President - Sales and Mktg, HMSI, said, “April 2017 results mark a great entry for Honda into the new financial year! Honda sold a total of 578,929 two-wheelers with phenomenal 34% growth on the back of customer demand for Honda’s upgraded BS-IV portfolio. Within segments, automatic scooter sales led the momentum with 40% growth to cross 3.5 lakh mark for first time ever (368,618 units).”

Hero MotoCorp saw its domestic two-wheeler sales slip by 2.5% to 585,655 units in April 2017 from 600,525 units in April last year. The company’s exports were also in negative terrain, declining by 18.4% y-o-y to 9,963 units during the month.
Bajaj Auto was another two-wheeler major to register de-growth in domestic sales that declined by 19.2% to 161,930 units in April 2017 (April 2016: 200,433 units). Bajaj Auto’s two-wheeler exports were, however, in fast forward mode, leapfrogging by 44.3% y-o-y to 132,002 units during the month.

Staying on course, TVS Motor Company reported modest growth of 4.0% in domestic two-wheeler sales at of 205,522 units in April 2017, as against 197,692 units a year ago. TVS two-wheeler exports grew by handsome 43.9% y-o-y to 35,485 units during the month.

India Yamaha Motor sold 68,827 units in domestic market during April 2017, up 7.6% (April 2016: 63,942 units).

Continuing its impressive run, Royal Enfield  registered domestic sales of 58,564 units in April 2017, up 24.5% (April 2016: 47,037 units). Including exports that numbered 1,578 units, the company crossed the 60,000-unit mark for the first time in a month to clock 60,142 units of sale during the month.

Suzuki Motorcycle India witnessed domestic sales of 36,306 units in April 2017, growing by 43.2% y-o-y.

Commercial Vehicles Feel the Heat of Supreme Court Order

Heavy discounting in March 2017 to clear BS III stock, implementation of BS IV emission norms from April and the subsequent price increase in vehicles resulted in sharp fall in CV sales. M&HCVs were the worst affected.

Market leader Tata Motors saw its domestic CV sales fall by 36.8% y-o-y to 14,778 units in April 2017. The company said that its vendors struggled to keep pace with the sudden spurt in demand for BS IV vehicles due to the ban on sale of BS III vehicles effective from 1st April.

With domestic sales volume at 6,408 units in April 2017, Ashok Leyland witnessed a steep 32.6% decline vis-à-vis 9,514 units a year ago.

Mahindra & Mahindra posted a 16.4% y-o-y uptick in its domestic CV sales that aggregated 15,066 units in April 2017. However, Mahindra M&HCV sales in domestic market plunged by 41.0% y-o-y to 372 units during the month.

VE Commercial Vehicles registered a massive 44.5% slump in domestic sales of Eicher branded trucks & buses, which stood at 2,578 units in April 2017.

Ban on sale of BS III vehicles apart, uncertainty & apprehensions arising out of the impending introduction of GST from July 2017 is affecting the CV sales currently. However, with the forecast of normal monsoon this year, the buoyancy is likely to return soon.




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