Subdued Festivities for Auto Market 

After a bumper September, the auto market witnessed subdued sales in October. While the sales figures looked healthy, on the face of it, in September 2017, the retail sales did not keep pace with the despatches from OEMs, resulting in inventory build-up and stock correction in October.  The early advent of festive season this year also made the sales figures look artificially impressive in September 2017, compared to the lower base in September 2016 during which there was no major festival. The month of October 2017 was a mixed bag, with total vehicle sales across segments in domestic market declining marginally by 1.8% to 2,162,164 units from 2,201,489 units a year ago.

Festivals fail to light up the passenger vehicle sales

Passenger vehicle sales in the Indian market at 279,837 units in October 2017 were more or less flat vis-à-vis 280,577 units in October last year. Barring Maruti Suzuki and Toyota Kirloskar Motor, all other major players in the Indian passenger vehicle market registered negative growth during the month.

The market leader, Maruti Suzuki India (MSI) reported domestic sales of 135,128 units in October 2017, clocking a growth of  9.3% over 123,684 units in October last year.  The company’s entry-level duo of Alto and the Wagon R witnessed 4.2% drop in domestic sales that stood at 32,490 units in October 2017 (October 2016: 33,929 units). However, the quintet of compact cars – Swift, Celerio, Ignis, Baleno and the Dzire – clocked a healthy growth of 24.7% y-o-y in domestic sales, thanks to the continuing strong demand for the third-generation Dzire compact sedan. The compact car segment contributed 62,480 units to the company’s domestic sales tally in October 2017. 

The company’s C-segment offering – Ciaz saw a sharp 35.4% fall in domestic sales to  4,107 units in October 2017 (October 2016: 6,360 units). On the other hand, with compact SUV, Vitara Brezzaa sustaining the sales momentum, the company’s UV portfolio, comprising Gypsy, Ertiga, Vitara Brezza and the newly introduced S-Cross facelift, clocked a handsome 29.8% y-o-y increase in domestic sales at 23,382 units during the month.

Hyundai Motor India Ltd (HMIL), the second largest player in the Indian car market, too posted lower-than-expected sales. In October 2017, the Chennai-based manufacturer sold 49,588 passenger vehicles in the Indian market, down 0.9% (October 2016: 50,017 passenger vehicles). 

Commenting on the October sales, Rakesh Srivastava, Director - Sales and Mktg, said, “Hyundai did its highest retail of over 50,000 units in a festival month, with a wholesale of 49,588 units on the strength of strong demand for the Grand i10, Elite i20 and Creta. In addition, the Next Gen VERNA received strong customer response with over 20,000 cumulative bookings and 150,000 enquiries.”

Domestic sales of Mahindra & Mahindra (M&M) were under stress in October 2017. M&M sold 23,413 passenger vehicles in the Indian market during October 2017, which reflected a 5.4% dip vis-à-vis the domestic sales figure of 24,737 passenger vehicles in October 2016.

Rajan Wadhera, President, Automotive Sector, M&M, commented, "The auto industry has had a mixed month in terms of sales in October. The build up to Dhanteras and Diwali was good but the demand tapered off subsequently. Last year, all festivals were in the month of October and the industry volumes had a high base. This year, September and October combined, we have grown by 7.9% in the auto division. Going forward, we enter into a year-end period of lower sales.”  

Meanwhile, Tata Motors’ Passenger Vehicles Business Unit posted sales of 18,314 units in the domestic market during October 2017, up 3.2% over 17,742 units in October last year. According to the company, the sales were driven by continued good performance of new generation vehicles Tiago, Tigor, Hexa and an excellent response received for the newly launched compact SUV, Nexon. 

Domestic sales tally of Toyota Kirloskar Motor (TKM) at 12,403 units in October 2017 clocked a 6.5% uptick vis-à-vis 11,651 units a year back. TKM’s exports soared by 65.2% y-o-y to 1,609 units during the month. “We are happy that the festive season has given a positive push to the domestic sales in the auto industry. There is a spur in the customer demand. Innova Crysta and Fortuner continue to enjoy good growth in demand in the market,” commented N Raja, Director & Sr VP, Sales & Mktg, TKM. 

Honda Cars India Ltd (HCIL) registered domestic sales of 14,234 units in October 2017 as against 15,567 units in the corresponding month last year, which translated into 8.6% de-growth. City sedan, with sales figure of 4,366 units, was the best seller for Honda, followed by WR-V - 3,443 units, Jazz – 2,646 units, Amaze – 1,845 units, BR-V – 1,280 units, Brio – 640 units,  and CR-V - 14 units.

Yoichiro Ueno, President and CEO, HCIL, said, “There have been some market disruptions on account of GST and additional cess implementation in the last few months which resulted in pre-buying ahead of festive period this year. The festive purchases also spread across two months this year where we have witnessed a combined sales growth of over 6%. During October, we also faced some supply constraints of few components, due to which our production of some models got impacted and held us back in terms of dispatches. We have taken steps to strengthen the supply situation and hope it will normalize in November.”

Ford India’s domestic sales plunged 43.8% y-o-y to 4,218 units in October 2017. Anurag Mehrotra, President and MD, Ford India, said, “The ramp-up for new model introduction has impacted our wholesales for October.” 

Renault India, clocking domestic sales of 9,305 units in October 2017, witnessed a steep 25.0% decline from 12,409 units a year ago.

Ditto for Volkswagen India that posted a negative growth of 29.0% y-o-y to 3,929 units in October.

Two-Wheeler sales too stray off the course

Two-wheelers’ growth momentum came to a halt with domestic sales slipping by 2.8% y-o-y to 1,750,966 units in October 2017.

Numero Uno, Hero MotoCorp saw its domestic two-wheeler sales fall by 4.5% to 621,087 units in October 2017 from 650,217 units in October 2016. The company attributed the negative growth to the higher base in October last year, which comprised all major festivals. Hero MotoCorp set yet another global benchmark by selling over 3 lakh units of two-wheelers in retail sales in a single day - on the auspicious day of Dhanteras. “Achieving 2 million two-wheeler retail sales in this year’s festive season is a new benchmark,” Ashok Bhasin, Head of Sales, Marketing and Customer Care, Hero MotoCorp, said.

Honda Motorcycle & Scooter India (HMSI) recorded domestic sales of 437,548 units in October 2017, which marked a 7.0% decline vis-à-vis 470,358 units a year ago. With this performance, the company saw its India’s retails cross the 13.50-lakh-unit mark in the two months (September-October 2017) and break its own previous 2016 festival retail high by significant 1 lakh units.

Yadvinder Singh Guleria, Sr VP - Sales & Mktg, HMSI, said, “The increased production capacity by 50,000 units per month ahead of the festival coupled with rapid network expansion, availability of models up to last mile network and 360 degree marketing push resulted in record festive retails.

TVS Motor Company’s domestic sales at 270,372 units in October 2017 were flat, falling marginally by 0.7%, compared to 272,229 units in October last year

Likewise, Bajaj Auto saw its two-wheeler sales in the Indian market end up near flat at 211,553 units in October. The company’s two-wheeler exports, however, grew by healthy 20.4% y-o-y to 114,225 units during the month. 

Remaining in fast lane, Royal Enfield clocked 16.5% uptick in its domestic motorcycle sales that added up to 68,014 units in October 2017 (October 2016: 58,379 units). 

Domestic sales of India Yamaha Motor at 86,266 units in October 2017 were stagnant vis-à-vis 86,430 units a year ago.

Suzuki Motorcycle India posted domestic sales of 46,033 units in October 2017 – up 26.1% over 36,514 units in October 2016.

LCVs shore up CV sales numbers

The commercial vehicle sales encountered a speed-breaker in October, after impressive performance in Q2 of FY’18. The overall commercial vehicle sales numbers were in positive territory, though. While the domestic sales of M&HCVs crawled up by a paltry 0.9%, that of LCVs witnessed a decent growth of 10.7% y-o-y in October 2017. 

Tata Motors notched up a 6.4% increase, selling 30,572 commercial vehicles in domestic market during October 2017 (October 2016: 28,738 units).

Ashok Leyland clocked domestic sales of 11,739 units in October 2017, which represented a 2.4% uptick over 11,465 units in October 2016.

Commercial vehicle sales of Mahindra & Mahindra (M&M) in the Indian narket aggregated 19,279 units in October 2017 – up 6.8% y-o-y. 

Volvo Eicher Commercial Vehicles (VECV) sold 4,463 Eicher branded trucks and buses in domestic market during October 2017, as against 3,854 units in the corresponding month last year, clocking an 15.8% growth.

GST woes besetting the small businesses are weighing down the passenger vehicle and two-wheeler segments in particular. GST Council has recently reduced the GST rates in respect of over 200 items and relaxed the compliance requirements in the case of small businesses, which is likely to have a positive impact on auto market. Going forward, the sales are expected to pick up.

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