Vehicle Sales Maintain Growth Momentum in June

Vehicle sales stayed on growth path in June 2016. However, an analysis of the sales figures for the month reveals that M&HCV sales that had been clocking healthy double-digit growth since January 2015 are losing steam. On the other hand, two-wheelers riding on improved rural sentiment sustained the pace of growth in June. All the segments of auto market clocked growth with total domestic sales growing by 10.7% y-o-y to 1,795,894 units in June 2016.


Driven by new models, passenger vehicle sales move up despite production disruption at Maruti Suzuki


The country’s largest carmaker Maruti Suzuki India (MSI) that commands roughly 48% share of the domestic PV market, reported domestic sales of 92,133 units in June 2016, a double-digit drop of 10.2% vis-a vis 102,626 units in June 2015. This was MSI’s worst sales performance since June 2014.The company’s production was adversely impacted in early June due to fire at its key supplier Subros’ Manesar plant. The exports of Maruti Suzuki also plunged by 46.8% y-o-y to 6,452 units during the month.


Meanwhile Maruti Suzuki is gradually stepping up the production of Baleno and Vitara Brezza to service the strong demand for these two models.


Hyundai Motor India Ltd (HMIL), the second largest player in PV segment in the Indian market, witnessed domestic sales of 39,806 units in June 2016, which translates into a growth of 9.7% over the corresponding sales figure of 36,300 units in the same month last year. The carmaker’s total sales volume, including exports for June 2016 stood at 55,713 units, as against 52,064 units a year ago, representing 7.0% increase. The exports accounting for 15,907 units were more or less flat, crawling up by just 0.9% y-o-y during the month.


Commenting on the June sales, Rakesh Srivastava, Senior Vice President (Sales and Marketing), HMIL, said, “Hyundai volumes grew by 9.7% with sales of 39,806 units with strong pull performance of volume models - Grand i10, Elite i20 and Creta and on the buildup of positive environment with good beginning of monsoons and the announcement of 7th Pay Commission for the Government employees.”


The UV major, Mahindra & Mahindra (M&M) sold 17,068 passenger vehicles, including UVs, cars and vans, in June 2016 (June 2015: 15,880 units), posting a growth of 7.5%.


Pravin Shah, President & Chief Executive (Automotive), M&M said, “With the advent of a good monsoon, which we are currently witnessing, we hope to see improved sentiments and buoyancy in demand.”


Another homegrown automaker, viz. Tata Motors was also in fast lane, selling 14,973 passenger vehicles, including cars, utility vehicles & vans, in domestic market during June 2016 and, in the process, posting a growth of 8.0% y-o-y, thanks to enthusiastic response generated by Tata Tiago.


Riding on the recently launched Innova Crysta, Toyota Kirloskar Motor (TKM) that is one of the major manufacturers to have been dented by the ban on registration of large diesel cars in Delhi-NCR, reported sales of 13,567units in the Indian market during June 2016, registering a 29.7% upswing y-o-y. The company exported 1,352 units of the Etios series in June 2016. Total sales at 14,919 units were up 20.4% y-o-y during the month.


“The Innova Crysta has received an overwhelming response from customers and it now has a waiting period of 2 to 3 months. We respect the Hon’ble Court’s judgment regarding cleaning the bad air quality around us. We hope, the matter is suitably resolved at the earliest,” commented N Raja, Director & Senior Vice President (Sales & Marketing), TKM.


Renault India witnessed a spectacular growth of 172.7%, selling 11,837 units in the domestic market during June 2016. The impressive growth was driven by Kwid that saw domestic sales of 9,459 units during the month. The low base (June 2015: 4,340 units) also helped swell the whopping growth number.


Ford India’s domestic sales in June 2016 doubled to 9,469 vehicles (June 2015: 4,505 units), while exports nearly tripling to 10,285 vehicles compared to 3,452 vehicles a year ago.


“The recent announcements of Seventh Pay Commission, along with the prediction of normal monsoon and scrappage policy are keeping the industry optimistic about future growth. At Ford, we have continued to maintain a strong growth momentum. We are equally gratified by the customer response to our freshest product portfolio on offer and will soon strengthen it with the introduction of iconic Ford Mustang,” commented Anurag Mehrotra, Executive Director, Marketing, Sales and Service at Ford India.


Besides Maruti Suzuki, Honda Cars India Ltd (HCIL) was the other major car player to have registered negative growth in June 2016. The company’s domestic sales at 11,407 units in June 2016 were down 37.9% vis-à-vis  18,380 units in June 2015. The model-wise domestic sales break-up of HCIL for June 2016 stood as: City (3,581), BR-V (3,064), Jazz (2,593), Amaze (1,617), Brio (359), Mobilio (140) and CR-V (53).


Yoichiro Ueno, President & CEO, HCIL said “The shift in consumer preferences led to high stock of diesel vehicles at our dealerships. As a deliberate measure, we have been rationalising wholesale dispatches to correct the stock situation at our dealerships. The market is good and our retail sales were much higher than wholesales. The stock levels at our dealerships have been almost normalised and we expect that our wholesales would match the retail sales level in July. Our new model BR-V has received good acceptance in the market with over 11,000 cumulative bookings. We also recently achieved cumulative sales milestone of 200,000 units for Honda Amaze.”


M&HCV sales tapering off


After clocking a healthy double-digit growth for almost 1½ years, M&HCV sales are losing momentum. M&HCVs registered a paltry 1.9% growth in domestic sales that stood at 22,606 units in June 2016, as against 22,184 units in June last year. The good news is that LCVs sustained the pace, growing by 8.3% y-o-y to 33,426 units during the month.


Tata Motors’ total domestic sales of CVs at 23,700 units in June 2016 recorded a measly 1.1% uptick over 23,448 units in June 2015. While domestic sales of M&HCVs contracted by 11.4% y-o-y to 10,147 units that of LCVs rose by 13.0% y-o-y to 13,553 units during the month.


Domestic sales of Ashok Leyland, adding up to 10,455 units in June 2016, witnessed a 13.9% increase over 9,179 units a year ago. While domestic sales of M&HCVs at 8,038 units recorded 15.9% uptick, that of LCVs at 2,417 units were up 7.8% y-o-y during the month.


Maintaining double-digit growth, VE Commercial Vehicles (A Volvo Group and Eicher Motors JV) sold 4,313 units in domestic market during June 2016 as compared to 3,637 units in June 2015, recording an 18.6% rise. This includes 4,256 units of Eicher brand and 57 units of Volvo brand.


Mahindra & Mahindra (M&M) recorded a healthy double-digit growth of 15% in domestic sales of M&HCVs, which aggregated 752 units in June 2016 (June 2015: 654 units). Domestic sales of Mahindra LCVs at 12,788 units were up 5.8% y-o-y during the month.


Two-Wheeler Sales Thrive on Good Monsoon


The forecast of an above-normal monsoon, followed by bountiful rains, has provided spark to the two-wheeler market that had been facing a challenging environment due to rural woes. Domestic sales of two-wheelers clocked a decent 12.3% growth y-o-y to 1,468,035 units in June 2016.


The market leader, Hero MotoCorp witnessed a 4.4% uptick in domestic sales that added up to 538,064 units in June 2016, vis-a-vis 515,279 units a year earlier.


The Pune-based Bajaj Auto reported a 9.1% rise in domestic two-wheeler sales with 168,625 units sold in June 2016, as against 154,596 units in the same month last year.


Driving in top gear, Honda Motorcycle and Scooter India (HMSI) sold 407,979 units in domestic market during June 2016, compared to 331,859 units in June 2015, registering a staggering growth of 22.9%.


TVS Motor Company posted a good 16.3% jump in domestic two-wheeler sales. The company sold 206,784 units in June 2016, compared to 177,687 units in June 2015.


India Yamaha Motor registered a stellar 30.7% growth in domestic sales (including Nepal) at  67,204 units in June 2016, compared to 51,432 units during June last year. The company had clocked a 36% increase in sales during May 2016 and a fantastic 66% growth in sales during April 2016.


Constantly growing at scorching pace, Royal Enfield posted a whopping 34.1% surge in domestic sales at 49,060 units in June 2016, as against 36,597 units in June 2015.


With the Seventh Pay Commission’s Rs. 85,000 crore bonanza awaiting the Government employees & pensioners and the monsoon covering almost the entire country, the short-term and medium-term outlook for the auto market is promising. Though M&HCVs have shown signs of wearing off recently, the pick-up in infrastructure and construction-related activities, along with the expected demand for buses under JNNURM-II in H2 FY17, is likely to give a boost to the CV sales.

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