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High interest rates, fuel prices and downbeat sentiment continue to be the bane of auto market

Diwali failed to light up the auto market that witnessed tepid sales in November 2012. The demand spurt seen in October 2012 did not carry over into November 2012, as the downbeat economic environment, coupled with high inflation, interest rates and fuel prices kept the consumers away from the showrooms.

 

The festival fervour was missing in the domestic passenger car market that dipped 8.25% from 172,493 units a year earlier to 158,257 units in November 2012 despite a spate of launches in the festive season and steep discounts on offer. Passenger cars recorded the steepest drop since August 2012, when sale volumes in the segment had plummeted 18.6% to 118,142 units. The overall passenger vehicle segment, which includes utility vehicles, however, grew 3.86% in November, thanks to the continuing buoyancy in utility vehicle sale numbers that soared 69.45% y-o-y to 48,692 units during the month.

Two-wheelers scraped through by the skin of their teeth, recording a flattish 1.23% growth in domestic sales at 1,175,429 units during November. This is in sharp contrast to the steady double-digit growth recorded by the two-wheeler segment in the previous years. For two-wheelers, the situation this time around is more challenging than in the latter half of 2008 when the severe global recession post Lehman collapse had gripped the market across the world. Two-wheelers had then remained largely unhurt. Reflecting the current economic environment, commercial vehicles continued to slide. The month of November 2012 saw the domestic sales of CVs decline by 7.3% y-o-y to 61,410 units. The numbers could have been much worse but for the LCVs, the domestic sales of which expanded by 9.55% y-o-y to 43,969 units during the month.

Overall, the domestic market encompassing all segments, managed to clock a growth of 1.8% with total domestic sales of 1,515,600 units vis-à-vis 1,488,894 units in the like period previous year. Riding on its hot-selling models like Swift, Swift DZire and Ertiga, Maruti Suzuki India Ltd (MSIL) clocked a decent 9.7% increase in its domestic sales to 90,882 units in November 2012 from 82,870 units a year ago. Demand, however, continued to remain weak in MSIL s bread-and-butter small car segment comprising Alto, Maruti800, WagonR and A-Star, which declined by 5.8%, suggesting persisting sluggishness in sales of petrol-powered cars.

The sales performance of Hyundai Motor India Ltd (HMIL), the country s second largest carmanufacturer, was flat during the month. The domestic sales slipped marginally by 0.7%to 34,751 units (35,000 units). HMIL s exports at 21,011 units (22,071 units) were also lower by 4.8%. The segment-wise cumulative sales of HMIL for November 2012 were: A2 segment (Eon, Santro, i10 and i20) - 48,650 units; A3 Segment (Accent and Verna) - 6,526 units; A4 Segment (Elantra) - 513 units; A5 segment (Sonata) - 20 units; and SUV (Santa Fe) - 53 units.

Commenting on the November sales, Rakesh Srivastava, Vice President-Marketing and Sales, HMIL said, The adverse market conditions due to high interest rates and inflation continued to pose challenges for growth. However, the festival season stimulated sales of petrol cars. Eon demand continues to grow month on month leading to supply challenges.

Holding steady, Mahindra & Mahindra Ltd (M&M) reported a 18% rise in its auto sales numbers, which stood at 48,143 units (including Mahindra Navistar sale numbers) during November 2012 as against 40,722 units in November 2011.

Domestic sales of M&M adding up to 46,755 units during November 2012 increased 23% over 38,159 units in the same month of 2011. The Passenger Vehicle segment (which includes the UVs and Verito) surged 38% y-o-y to clock sales of 24,604 units in domesticmarket. The company s 4-wheeler commercial segment comprising passenger and load categories grew by 7% to 14,353 units, while the 3-wheeler sales in local market recorded a 16.6% increase y-o-y at 6,867 units during November 2012.

Pravin Shah, Chief Executive,Automotive Division,M&Msaid, We are happy tomaintain our growth trend on the back of our portfolio of products especially the Quanto, which has crossed more than 12,000 bookings in just over twomonths.

Honda Cars India Ltd (HCIL) was another player to put up an impressive performance during the month of November 2012 with a robust 87% y-o-y surge in its domestic sales at 3,711 units in November 2012. The healthy growth came about as a result of low base, though. The company also exported a total volume of 326 units during the month.

The.model-wise sales break-up of HCIL in November 2012 is: Brio 2199 units; Jazz 186 units; City 1218 units; Civic 72 units; and Accord 36 units.

Toyota Kirloskar Motor (TKM) sold 10,352 units in domestic market November 2012 as compared to 13,956 units in the corresponding month last year, skidding by 26%. The company attributed the negative growth to plant shutdown for ramping up production capacity from next calendar year and partly to the sluggish market conditions. The sales volume was dragged down chiefly by the Etios series that sold 4,231 units in November 2012, down 48.8% from 8,271 units in November last year.

Record exports helped Ford India register a paltry 0.6% rise in its total sales at 10,155 units, including local sales and exports, during themonth of November 2012. The company s domestic sales at 5,944 units remained weak compared to 8,322 units sold in November 2011.

Ford India exported 4,211 cars in November 2012, an over 138% increase from 1,769 units exported in November last year. Exports hit an all-time high for the second consecutive month after shipments hit 3,371 units in October. Vinay Piparsania, Executive Director,Marketing, Sales and Service, Ford India said, Despite ongoingmarket challenges, we are very pleased to see customer sentiment improving and their confidence in the Ford brand continuing to grow. Boosting its pan-Indian sales and service network, the company opened three new dealerships in Rewari & Sirsa (Haryana) and Jaipur (Rajasthan) in November 2012, taking the number of sales and service outlets to 247 in 129 cities. The company plans to take the number to over 500 by mid-decade.

Tata Motors' total sales (including exports) of commercial and passenger vehicles in November 2012 dived 13.4% y-o-y to 66,500 units during the month of November 2012. The domestic sales of Tata commercial and passenger vehicles in November 2012 stood at 62,354 units, falling by 14% from 72,474 units sold in November last year.

Passenger Vehicle Business Unit of Tata Motors logged disappointing sales numbers, recording 18,031 units in domestic sales, a steep 35% drop from 27,735 units sold in November 2011. Sales of the Tata Nano were down 45.3% y-o-y to 3,503 units. While the Indica range sales crashed 36.3% to 6,956 units, the Indigo range sales of 3,079 units in November 2012 compared to 6,213 units a year ago were equally unexciting. The Sumo/Safari/Aria/Venture range did slightly better registering a 7% uptick in domestic sales at 4,493 units in November 2012 year.

Ditto for Ashok Leyland that saw its domestic sales, excluding Dost fall sharply by 31.3% y-o-y to 3,891 units in November 2012. However, the sales tally of Dost at 2,883 units ensured a positive growth in domestic sales volume at 4.6% for the company during the month.

In tune with the sluggish market conditions, Hero MotoCorp witnessed a 6.1% dip y-o-y in domestic sales that read 487,505 units in November 2012. Likewise, domestic 2-wheeler sales of Bajaj Auto and TVS Motor in November 2012 were flat at 227,186 units and 150,056 units, respectively.

Honda Motorcycle & Scooter India (HMSI) that has been growing at a brisk pace notched up a 10.2% increase in domestic sales of its two-wheelers to 209,438 units in November 2012. The company s exports surged by 47.1%y-o-y to 13,723 units during the month. India Yamaha Motor and Suzuki Motorcycle India recorded healthy double-digit growth. While the domestic sales of India Yamaha Motor grew by 32.5% to 37,344 units in November 2012, the corresponding figure of 38,684 units for Suzuki Motorcycle reflected a 27.2% uptick y-o-y.

Despite the IIP registering an unexpected 8.2% growth in October 2012 and the WPI showing a downward trend, the environment continues to be difficult. Even otherwise, the experts are cautioning not to read too much in the latest IIP growth rate as it reflects more the base effect than the real pick-up in industrial activity.

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