Auto Market Continues to Face Challenging Environment

Betting on Festival Spirit

The downbeat outlook continues to plague the vehicle sales in domestic market. Retarders, such as, slowing economic growth, inflation and high fuel prices & interest rates were at work again to depress the auto market in September 2012.


The month of September 2012 saw tepid sales year-on-year, partly due to the shift of festival season to October & November this year as against October in 2011. Total domestic vehicle sales across all categories in September 2012 dived 9.4% to 1,418,134 units from 1,565,757 units in the same month last year. As in the previous month, exports stayed in negative terrain declining by 7.9% y-o-y to 240,820 units during September 2012.

Domestic sales of passenger vehicles climbed up by 4.9% to 228,806 units during September 2012 from 218,166 units a year ago, thanks to the continuing buoyant sales of utility vehicles that zoomed by 51%. However, passenger car sales fell 5.4% in September for the second consecutive month.

Commercial vehicle sales at 70,683 units in domestic market were stagnant during September 2012, compared to the corresponding sales figure of 70,658 units a year ago. While Light Commercial vehicles maintained the momentum to record a growth of 12% in domestic sales at 44,212 units, Medium & Heavy Commercial vehicles remained on a downward trajectory, witnessing a 14% fall in domestic sales to 26,471 units during the month of September 2012.

Reflecting the economic & business environment, three-wheelers were also flat in September 2012 registering just 0.6% growth in domestic sales at 49,576 units in September 2012. The exports too recorded a negative growth of 9.6% y-o-y.

The slowing economy and agriculture growth is beginning to cast its shadow on 2-wheeler segment as well. With rural market that had all along bucked the trends and continued to grow till recently, hitting the slow lane, domestic sales of twowheelers plummeted by 12.9% y-o-y to 1,069,069 units. Motorcycles turned in an unflattering performance as the domestic sales fell sharply by 18.9%. Scooter sub-segment, however, continued to make inroads into the domestic two-wheeler market with a growth of 10.2% at 254,321 units during the month of September 2012 as against 230,838 units in September 2011.

Market leader, Maruti Suzuki India Ltd (MSIL) posted a better than expected growth of 9.8% y-o-y by selling a total of 93,988 units in September 2012 which includes 5,187 units of export. The domestic sales increased by 12.7% to 88,801 units during the month. The domestic sales in mini segment (M800, Alto, A-Star, WagonR) showed a 4.9% rise, while the compact segment (Swift, Estilo, Ritz) dipped by 9.7% y-o-y to 17,813 units. Exports declined sharply by 23.1% y-o-y. Hyundai Motor India Ltd (HMIL), the second largest carmaker, recorded a 14.2% dip in domestic sales at 30,851 units in September 2012, compared to 35,955 units in September last year. HMILs exports at 22,706 units staged a turnaround with a modest growth of 3.8% y-o-y.

The segment-wise cumulative sales of HMIL in September 2012 were: A2 segment (Eon, Santro, i10, i20) - 46,414 units; A3 Segment (Accent and Verna) - 6,287 units; A4 Segment (Elantra) - 781 units; A5 segment (Sonata) - 20 units; and SUV (Santa Fe) - 56 units. Commenting on the sales, Rakesh Srivastava, Vice President, National Sales, HMIL said, We expect that the suppressed demand would improve on account of festive purchases as the demand peaks during this period.

Toyota Kirloskar Motor (TKM) saw its sales in Indian market decline by 5.4% to 12,115 units in September 2012 from 12,807 units in the corresponding month last year. However, its multi-utility vehicle Innova registered a 23% growth in domestic sales with 5,858 units and Fortuner grew 21% to 1,301 units during September 2012. The newly launched Camry, now locally manufactured in India, sold 85 units in September 2012. With exports contributing 2,176 units, TKM s total sales in September 2012 grew by 11.6% y-o-y to 14,291 units.

We have seen a drop in sales lastmonth. Themarket has been quite sluggish and themarket sentiments are very low in the passenger car segment.We hope to see it picking up in the festive season, stated Sandeep Singh, DeputyManaging Director Marketing, TKM.

Honda Cars India Ltd (HCIL), sold 5,508 units during September 2012 as against 4,758 units during the same month in 2011, representing an increase of 16%.

Model wise sales break-up of HCIL during Sept 2012 is: Brio 2,064 units; Jazz 556 units; City -2,815 units; Civic 47 units; Accord - 23 units; and CR-V 3 units.

In keeping with the market sentiment, Tata Motors' total sales (including exports) of commercial and passenger vehicles in September 2012 stood at 75,773 units, down 3.8% y-o-y. The domestic sales of Tata commercial and passenger vehicles during September 2012 added up to 70,332 units, slipping by 3% from 72,566 units sold in September last year.

Tata commercial vehicles witnessed 48,680 units of sale in domestic market, recording a modest 5% increase over 46,247 units a year ago. The growth was once again propelled by LCVs that grew by a healthy 19%, contributing 33,393 units to the domestic sales tally of commercial vehicles in September 2012. On the other hand, M&HCV sales of Tata Motors decreased by 15.8% to 15,287 units from 18,155 units a year ago.

Domestic sales of Tata Motors in Passenger Vehicles segment aggregated 21,652 units in September 2012, falling sharply by 18% from the corresponding sales figure of 26,319 units a year earlier. Sales of the Tata Nano stood at 5,491 units, clocking a robust growth of 87%. The Indica range posted 7,936 units in domestic sales, plunging by 23%, while the domestic sales of Indigo range at 3,706 units, tripped by whopping 52% y-o-y. The Sumo/ Safari/ Aria/ Venture range sales were 4,519 units, slipping by 15% y-o-y.

Beating the slowdown, Mahindra & Mahindra (M&M) clocked a 10.2% uptick in its total domestic sales at 45,263 units as against 41,136 units during the same month last year. Passenger vehicles segment (which includes the UVs and Verito) posted sales tally of 23,808 units, rising by 22% y-o-y. M&Ms exports for the month of September 2012 stood at 3,079 units, up 2.6%.

Speaking on the performance, Pravin Shah, Chief Executive,Automotive Division,Mahindra &Mahindra Ltd, said, We are happy with the performance and growth that we have achieved during September 2012 over the festive season month of September 2011. Post reduction in CRR, banks have started cutting lending rates and are also looking at reducing vehicle loan rates.We are hopeful of a good performance in the upcoming festive season.

On the back of strong sales numbers posted by its small commercial vehicle, Dost, which sold 3,027 units during September 2012, Ashok Leyland managed to clock a robust 33.6% y-o-y rise in its domestic sales at 10,002 units during September 2012. Domestic sales ofAshok Leyland s M&HCV s were in negative terrain, witnessing a 7.1%de-growth.

With slowdown enveloping rural market, two-wheelers could not escape the sluggish sales blues either. Numero Uno, Hero MotoCorp Ltd (HMCL) witnessed its citadel crumbling further with a negative growth of 25.7% in its domestic sales that numbered 393,852 units in September 2012. The company s exports were also not enthusing and plunged by 44% to 10,935 units during the month.

Commenting on the sales performance, Anil Dua, Senior Vice President (Marketing & Sales), Hero MotoCorp Ltd said,The sales number of September reflects the prevailing market sentiment. The upcoming festive season is expected to improve the overall disposition of the market, and we expect the industry to get back on the growth path with the festive season demand coming in. We have a comprehensive marketing and customer engagement plan lined up for the festive season in October and November, and have also ensured there is sufficient stocks across dealerships to meet the expected market demand.

Honda Motorcycle & Scooter India (HMSI) continued its impressive run, sluggish market conditions notwithstanding, with its domestic sales soaring 38%y-o-y to 231,455 units during themonth of September 2012. HMSI s exports were also on growth trajectory, rising by 10.7% y-o-y to 11,671 units during the month. Other notable performance came from Suzuki Motorcycle India that recorded a hefty 33.3% upsurge in its sales in Indian market at 38,003 units in September 2012.

Other two-wheeler majors in Indian market, namely, Bajaj Auto, TVS Motor and India Yamaha were in negative terrain, slipping y-o-y by 20%, 21.8% and 17%, respectively.

Auto market is betting on the revival in consumer sentiment during festival season in October and November 2012 and on a number of new launches to boost sales during the remainder of the year

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