Vehicle Sales in May - A Mixed Bag

The month of May 2017 turned out to be a mixed bag for auto market in India. The sales of passenger vehicles and two-wheelers remained on course, riding on new models and upbeat sentiment as a result of the gradually improving economic environment and forecast of a normal monsoon. However, commercial vehicles and 3-wheelers could not recover from the shock of Supreme Court order abruptly banning sale of BS III vehicles from 1st April 2017. Total domestic sales encompassing 2 & 3-wheelers, passenger vehicles, pick-ups, buses and trucks at 2,035,490 units in May 2017 grew by 10.1% vis-a-vis 1,849,542 units in May 2016.

Passenger Vehicle Sales Stay on Growth Trajectory

Driven by the new cars and compact SUVs, passenger vehicle sales in domestic market remained steady, growing by 8.3% to 251,642 units in May 2017 from 231,640 units a year ago. UV segment continued to make big strides, with domestic sales witnessing a healthy 18.8% increase y-o-y to 69,845 units during the month.

Maruti Suzuki India (MSI), a pacesetter in the Indian car market, powered the domestic passenger vehicle sales, accounting for130,248 units in May 2017 (+15.10%). Interestingly, thanks to surging demand for the Baleno and Vitara Brezza, the company has increased its PV market share by 3.2 percentage points from 48.60% to a handsome 51.8% percent within a year. MSI’s entry level duo of Alto and WagonR sold 39,089 units in May 2017, up 18.1% (May 2016: 33,105 units). The sextet of compact cars comprising the Swift, Ritz, Celerio, Ignis, Baleno and Dzire witnessed domestic sales of 51,234 units, growing by 10.1% over 46,554 units in May 2016.

Hyundai Motor India Ltd (HMIL), the 2nd largest car player in the Indian market, registered domestic sales of 42,007 units in May 2017, crawling up by just 1.6%, compared to 41,351 units in May 2016.   HMIL’s exports fell sharply by 30.1% y-o-y to 8,257 units in May 2017 from 11,805 units a year earlier. Commenting on the sales numbers, Rakesh Srivastava, Director, Sales & Mtkg, HMIL, said, “Hyundai volumes at 42,007 units maintain the growth momentum in passenger vehicles on the strength of the demand pull created by the Grand i10, Elite i20, Creta and the newly launched new Xcent.”

Homegrown UV major, Mahindra & Mahindra sold 20,270 units in the domestic market during the month of May 2017, registering a marginal growth of 3.2% (May 2016: 19,635 units).  The domestic sales tally was majorly contributed by the company’s UVs that accounted for 19,331 units in May 2017.

Another domestic auto player, Tata Motors saw a healthy 32.2% surge in its domestic passenger vehicles sales, including cars, UVs and vans, which stood at 12,499 units in May 2017 vis-à-vis 9,456 units in May 2016. The sales were driven by the new-generation cars - Tiago, Tigor and Hexa.

Ford India recorded sales of 6,742 units in the domestic market during May 2017, which translated into growth of 16.6% over 5,780 units in May last year. The company’s exports stayed in fast lane, soaring by 45.8% y-o-y to 16,761 units during the month.  

Meanwhile, Honda Cars India Ltd (HCIL) sold 11,278 units in the domestic market during May 2017, clocking a 13.3% increase (May 2016: 9,954 units). Honda City continued to be the top-selling car for HCIL in the Indian market with a tally of 4,046 units, followed by the recently launched WR-V crossover, which saw 2,814 units being sold in May. Yoichiro Ueno, President and CEO, HCIL, said: “We are happy to have achieved positive growth in May. We continue to receive strong demand for the new City and the WR-V. The government’s plan for timely rollout of GST and a better monsoon forecast will aid in sales growth in the coming months.”

Domestic sales of Toyota Kirloskar Motor (TKM) at 10,914 units in May 2017 were down 13.5% (May 2016: 12,614 units). N Raja, Director and Senior Vice-President, Sales & Mktg, TKM, commented, “The Innova Touring Sport, launched in May, has been appreciated by customers for being the first mover in the MPV segment with an SUV styling.  With the ambiguity surrounding the upcoming GST proposed tax structure, customers are postponing their plan of purchasing the vehicle after the GST implementation. We expect this impact to magnify in June 2017, until the customers have a clear understanding of the final pricing after the GST rollout.”

Renault India recorded a 3.5% uptick in domestic sales, which aggregated 8,639 units in May 2017, as against 8,343 units a year ago.

Nissan India saw its domestic sales go up by 5.7% y-o-y to 3,707 units in May 2017. The company’s exports at 6,830 units in May were down 36.9% y-o-y.

Two-Wheeler Market Steady

Thanks to the gradually improving sentiment in rural market and demonetization impact tapering off, two-wheelers sustained the sales momentum. Total domestic sales of two-wheelers adding up to 1,694,325 units in May 2017 grew by 11.9% over 1,514,334 units a year ago.

Two-Wheeler market leader, Hero MotoCorp, posted domestic sales of 613019 units in May 2017, up 8.0% vis-à-vis 583,117 units in May last year. The exports at 20,865 units increased by handsome 36.7% y-o-y during the month.

Hero MotoCorp also commenced commercial production at manufacturing facility of its subsidiary HMCL Niloy Bangladesh Ltd. This plant, located at Jessore in Bangladesh, has an installed capacity of 150,000 vehicles per annum. This is Hero’s second manufacturing facility at an overseas location.

The second largest two-wheeler player in India, Honda Motorcycle & Scooter India (HMSI), reported 510,381 units in domestic sales in May 2017, up by an impressive 22.7% y-o-y and  almost double of the overall industry growth. As a result, HMSI inched closer to Hero MotoCorp’s monthly sale numbers. May 2017 marked the second month for Honda in terms of achieving over 500,000 units in domestic sales.

Elaborating on the market, Yadvinder Singh Guleria, Senior Vice President - Sales and Mktg, HMSI, said, “Honda continues to outpace the two-wheeler industry growth growing nearly three times that of the industry in April-May 2017. Increased acceptance of Honda’s newly launched motorcycles has resulted in Honda maintaining its No. 2 position in the motorcycle segment for second month in a row. Overall, the two-wheeler industry has once again bounced back to double digit growth after six months indicating early signs of recovery. However, with upcoming GST implementation, industry sentiment is cautiously optimistic.”

TVS Motor Company sold 240,527 two-wheelers in the Indian market in May 2017, clocking a 16.3% uptick vis-à-vis 206,886 units in May last year.  TVS two-wheeler exports grew by 11.0% y-o-y to 34,899 units during the month.

Pune-based Bajaj Auto sold 156,523 two-wheelers in domestic market in May 2017, down 13.0% y-o-y. The company’s two-wheeler exports were also in negative terrain, declining by  5.4% y-o-y to 120,592 units during the month.

India Yamaha Motor recorded domestic sales of 69,429 units (including Nepal) in May 2017, which marked a 10.6% growth over 62,748 units in May last year. The company continues to expand in tier II and III cities with its service network and is working to ensure availability of spare parts across its national footprint.

Continuing its dream run, Royal Enfield witnessed a healthy double-digit growth of 24.2% in domestic sales at 58,647 units in May 2017, compared to 47,232 units in May 2016.  

M&HCV Sales Remain Under Stress

As in April, the sales of Medium & Heavy Commercial Vehicles (M&HCVs) remained depressed in May 2017, with domestic sales declining steeply by 33.0% y-o-y to 16,716 units. LCVs, on the other hand, clocked 14.3% growth y-o-y in domestic sales that added up to 36,741 units during the month.

Tata Motors, citing the global supply constraints of fuel injection pumps for BSIV engines as a major reason for dip in sales, reported a massive 37.2% fall in its domestic M&HCV sales that stood at 8,361 units in May 2017, as compared to 13,312 units a year ago. Domestic sales of Tata LCVs at 13,601 units were, however, up 5.6% y-o-y during the month.

Ashok Leyland was also in negative terrain, witnessing a 12.7% drop in domestic CV sales that aggregated 7,833 units in May 2017 vis-à-vis 8,970 units in May last year.  Ashok Leyland’s M&HCV sales in domestic market remained under stress, declining by 17.8% to 6,143 units (May 2016: 7,469 units).  Its LCVs, which were down in April, turned positive, clocking 21.9% growth in domestic sales at 2,932 units in May 2017(May 2016: 2,406 units).

Ditto for VE Commercial Vehicles that saw domestic sales of Eicher branded trucks and buses slump by 16.0% to 3,953 units in May 2017 from 4,705 in May 2016.

Mahindra & Mahindra’s total CV sales in domestic market were up 24.0% at 16,261 units in May 2017 (May 2016: 13,109 units). However, its M&HCV sales at 585 units remained negative, falling by12.9% to 585 units (May 2016: 672 units).

While forecast of a normal monsoon portends well for the auto market, with GST kicking in from 1st July 2017, there is fear of the unknown gripping the market currently. However, as the dust settles down and uncertainty ebbs away, the buoyancy is likely to return.

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