Auto Market Stays on Slippery Road

Vehicle sales continued to go downhill in the month of July 2013. Inflation, volatile fuel prices and higher cost of finance, coupled with uncertainty looming over the economy, kept the buyers off the showrooms. The severe slowdown in Asia’s 3rd largest economy was palpable, as all the segments of auto market churned out unflattering sales numbers.

Car sales in India fell for a record ninth month in a row in July posting 7.4 per cent decline. UVs that had been shoring up the sales numbers of passenger vehicle segment have started encountering speed bumps after recording a healthy 34% growth in the previous year and have slipped into the negative terrain, reflecting the all-pervasive downbeat sentiment and uninspiring state of Indian economy. Domestic sales of UVs fell sharply by 17.5% to 37,010 units in July 2013 from 44,878 units a year ago. 

Mirroring the slowing economy and industrial activity, medium & heavy stayed on downward curve, posting negative growth for the 17th month running. CV sales in domestic market plummeted by 19.9% y-o-y to 18,611 units in July. Like UVs in the case of passenger vehicle segment, LCVs had remained on positive growth path to impart somewhat respectability to the overall CV sales figures in the previous year. The all-pervasive gloom has cast its long shadow on LCVs as well, as reflected in their domestic sales volume that dipped 15% y-o-y to 55,301 units in July 2013. 

The story of Two-Wheelers and Three-Wheelers was no different with their domestic sales at 1,131,992 units and 41,570 units showing y-o-y de-growth of 0.06% and 6.1% respectively, during the month.

Benefitting from the low base of the last year, when the company was plagued with the labour trouble,  Maruti Suzuki India recorded a 5.8% increase in domestic sales at 75,145 units as against 71,024 units in July last year. The company’s exports, however, plunged 27.3% y-o-y to 8,154 units during the month. Sub-compact segment comprising Alto, A-Star and WagonR grew by 15.8% to 33,587 units as compared to 28,998 units in the year-ago month. Domestic sales of the compact segment comprising Swift, Estilo, Ritz were down 11.9% y-o-y to 13,882 units, while the company’s popular compact sedan Dzire posted a 33.6% growth in domestic sales during the month to 15,249 units as against 11,413 units in July, 2012.

Hyundai Motor India Ltd (HMIL), the country’s second largest car manufacturer and the largest passenger car exporter, registered a paltry 1% growth in domestic sales in July 2013 to 30,610 units from 30,450 units in July last year. The exports figure stood at 24,057 units vis-a-vis 23,904 units in July 2012.

Commenting on the sales, Rakesh Srivastava, Sr Vice President, Sales and Mktg, HMIL said, “In these challenging times of industry degrowth, Hyundai has grown in volumes and market share on the strength of a strong product portfolio and customer focus of its channel partners.”

Honda Car India, Renault and Ford India were the only volume car majors in Indian market, who stood out amid the gloom, riding on their hot-selling new launches. 

Honda Cars India Ltd (HCIL) reported a whopping 156% growth in July 2013, selling 11,223 units as against 4,386 units sold during the corresponding month in 2012. The company has sold 40,350 units and posted a cumulative growth of 65% during April–July 2013 vis-à-vis corresponding sales tally of 24,462 units in the same period last year.  HCIL also exported a total volume of 756 units during July 2013. 

Model wise domestic sales break-up of HCIL for July 2013 read as follows: Brio – 2,602 units; Amaze – 6,515 units; City -1,953 units; Accord – 20 units; and CRV – 133 units. 

Commenting on the company’s robust performance Jnaneswar Sen, Sr Vice President – Marketing & Sales, HCIL, said, "Honda Amaze has clocked its highest monthly sales of 6,515 units during July 2013 and is maintaining very good growth momentum having sold more than 24,000 units since its launch. As a strategic decision, the company plans to start a third shift from November 2013 to reduce the waiting period of the Amaze. The idea is to ensure customer’s convenience and amplify production for the overwhelming demand." 

Ford India sold 12,338 units in domestic and overseas markets in July 2013, registering a 48% surge year-on-year. This is the highest-ever monthly sales in its history. Ford India recorded 7,867 units of sale in Indian market, a 26% increase compared to July 2012. The company’s new offering Ford EcoSport has been a runaway success, receiving 30,000 bookings in the first 17 days after its launch in contrast to the overall macroeconomic challenges facing the country. 

Ford India exported 4,471 units, its highest export number ever and an increase of 114% y-o-y in July 2013. 

“Despite the near-term difficulty in the economy, our customers have put their trust in the urban SUV EcoSport, and with the Figo ranking as the best premium compact car in the prestigious J D Power India Vehicle Dependability Study 2013, we are delighted to achieve the highest-ever sales in our history this month. It’s encouraging to see customers visit our showrooms, ready to experience new emerging segments that are driving growth,” said Vinay Piparsania, ED, Marketing, Sales and Service, Ford India. 

Ford India commenced shipments of the EcoSport to South Africa, Mexico and Aruba in July. The company inaugurated a dedicated car parking yard at the Chennai port to handle the increased export vehicle volume more efficiently. 

Renault India also reported two-fold increase in sales in July at 2,763 units from 1,776 units in the same period of previous year.

Other car makers, including Tata Motors, Mahindra & Mahindra, Toyota Kirloskar Motor, General Motors India however, continued to struggle. 

Homegrown auto major, Tata Motors' total passenger vehicle sales in domestic market stood at 10,824 units in July, down 58.7% from 26,240 units a year-ago. Domestic sales of Tata commercial vehicles were also in negative terrain, diving by 13.3% y-o-y to 36,974 units in July 2013.

Another Indian player, Mahindra & Mahindra (M&M) registered a 21.2% decrease in its total sales at 37,096 units in July, 2013 compared to 47,059 units in the same month in 2012. M&M's domestic sales stood at 34,490 units, down 19.4% y-o-y.

Total sales of passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, stood at 15,530 units as against 22,011 units in July, 2012, reflecting a 29.4% de-growth.

"Over the last few months, the auto industry has been going through one of its worst phases of the last decade with planned shutdowns being taken by companies to correct demand-supply mismatch. The industry is in desperate need for an immediate stimulus from the government," M&M Chief Executive (Automotive Division) Pravin Shah said.

Toyota Kirloskar Motor (TKM) witnessed a 21% decline in July sales in the domestic market to 11,515 units from 14,574 units in the same month last year.

"Market continues to be sluggish and it seems that we are heading for tougher times in view of the current market outlook," Sandeep Singh, TKM Deputy Managing Director and COO (Marketing and Commercial) said.

Similarly, GM India reported a 10.7% fall in sales at 6,503 units in July 2013, compared to 7,285 units a year ago.

Volkswagen India saw its sales drop by 11.5% to 4,739 units in July 2013 from 5,357 units in Juy last year.

In the two-wheeler segment, market leader Hero MotoCorp reported a marginal rise of 0.7% in total sales at 4,87,545 units in July, as against 4,84,217 units a year ago.

With strike at its Chakan plant adversely impacting production, Bajaj Auto posted a 23.6% drop in its domestic two-wheeler sales at 153,173 units, while the company’s exports of two-wheelers dipped 13.5% y-o-y to 93,655 units in July 2013.

Chennai-based TVS Motor Company’s domestic two-wheeler sales were down 10.2% to 126,531 units in July 2013 from 1,40,862 units in July 2012. TVS motorcycles sales, however, grew by 8.5% to 57,886 units in July 2013, while scooters sales declined by 9.8% to 36,900 units.

Bucking the trends, Honda Motorcycle & Scooter India (HMSI) stayed on course to post a 20.1% rise in its total sales for July 2013 at 2,87,073 units. 

The two-wheeler sales of India Yamaha Motor in Indian market grew 34.6% to 37,494 units in July 2013 from 27,858 units in the same month a year back.

With economy continuing to face rough weather, rupee witnessing free fall, fuel prices remaining volatile and inflation, particularly food inflation, rearing its ugly head again, auto scenario in the near term is not encouraging. Auto market continues to pin its hopes on good monsoon and oncoming festive season.

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