Despite sops, car sales continue to plod in Feb

Sales continued to be lacklustre in February 2014 but OEMs are looking to March that could well see a spike as a result of the excise duty cuts and depreciation benefits. Amit Panday reports.

The sales slowdown entered its sixth consecutive month  (given that there was a spike in August 2013 on a slow base). The top two players – Maruti Suzuki and Hyundai Motor India – saw flat growth while Tata Motors, Toyota Kirloskar, Mahindra & Mahindra and GM India saw a drop in their monthly sales numbers

Bucking the trend were Honda Cars India and Ford India, both cashing in on their vehicles. On the two-wheeler front, while Hero MotoCorp saw flat growth during the month Honda Motorcycle & Scooter India, TVS Motor Co, India Yamaha Motor, and Mahindra Two Wheelers recorded higher numbers than in the year-earlier month.

Maruti Suzuki India recorded a 1.84 percent increase in its domestic sales in February 2014, selling a total of 99,758 units (February 2013: 97,955). The latest addition of Celerio model in its compact hatchback category (that comprises Swift-Ritz-Estilo) got off to a good start with 7,323 units sold, entering the Top 10.

The model which made its debut at the Auto Expo, raked in over 20,000 bookings, half of them for the automated manual transmission-equipped Celerio. Maruti’s entry-level pack (M800, Alto, A-star and Wagon R) sold a total of 37,342 units, down 9.60 percent (February 2013: 41,311). The Alto top-scored with 24,623 units sold.

The Swift sold 19,099 units and its sedan cousin, the Dzire with 18,353 units, both models’ sales remaining quite flat as compared to year-earlier monthly numbers. The SX4 sold 228 units in February 2014 as against 215 units in February 2013. Maruti’s utility vehicle range (Ertiga, Gypsy and Grand Vitara) took a hit, down 12.20 percent with sales of 5,231 units (February 2013: 5,957). 

Hyundai Motor India recorded a flat sales tally of 34,005 units in February 2014 (February 2013: 34,002), up 0.01 percent – it sold three cars more last month. Rakesh Srivastava, senior vice-president (sales and marketing), HMIL, said, “After the reduction in excise duty, the flow of enquiries has increased. It is expected that this will lead towards creation of a positive momentum.” In terms of numbers, the Grand i10 had another amazing month with 10,576 units sold. Since its launch in September, over 60,000 units have been sold.

Mahindra & Mahindra sold a total of 20,716 passenger vehicles (UVs and Verito cars) in February 2014 (February 2013: 25,837), down 19.82 percent. The company sold 9,137 units of the Bolero. Pravin Shah, chief executive, automotive division, M&M, said, “The auto industry has received the much-needed boost in terms of an excise duty reduction, which has resulted in higher enquiries.”

Honda Cars India (HCIL) sold 14,543 units, up 123 percent over February 2013, when it had sold 6,510 units. The new City and the Amaze contributed handsomely to the February 2014 tally with sales of 7,213 units and 6,030 units respectively. HCI has inaugurated its second car manufacturing plant at Tapukara in Rajasthan to reduce the waiting period on its models.

Jnaneswar Sen, senior vice-president (marketing & sales), said, “Deliveries for the petrol City have begun from February and with both our car manufacturing plants in operation, it will aid in quick delivery of cars and cater to strong demand.”

Tata Motors sold 13,388 passenger cars, down 33 percent over February 2013, when it had sold 19,981 units. Sales of the Nano, Indica and Indigo range added up to 9,026 units during the month while the Sumo, Safari, Aria and the Venture range together accounted for 2,299 units.

Toyota Kirloskar Motor sold 10,100 units in February 2014 as against 12,756 units sold in February 2013, down by 21 percent. N Raja, senior vice-president (sales and marketing), TKM, said: “The excise duty cut was a welcome step taken by the government to revive sales. However, other factors like high interest rate, falling rupee and unstable fuel pricing still loom large in the market.”

GM India reported sales of 5,607 units during the month as against 7,106 units sold during February 2013, down by 21.09 percent.

Ford India’s sales for February 2014 saw 51 percent growth with 6,799 cars sold (February 2013: 4,490). “The new pricing and features of the Ford Classic and wi-fi capability on the Figo have received an encouraging response from customers, alongside a continued demand for the EcoSport,” said Vinay Piparsania, ED, marketing sales and service, Ford India. The company sold 3,490 units of the EcoSport.

Two-wheelers buck downturn

Hero MotoCorp(HMCL) reported sales of 504,181 units in February 2014, up 0.58 percent year-on-year (February 2013: 501,271 units). Following the four percent cut in excise duty on February 17, the company had slashed prices across its product portfolio from 2-5 percent with the maximum reduction being Rs 4,500. Anil Dua, senior VP (marketing and sales), said: “We have been consistently selling over 500,000 units every month and this is clearly indicative of the inherent market demand that exists for our products.”

Honda Motorcycle & Scooter India (HMSI) sold 328,521 units as against 228,444 units sold in February 2013. The break-up was as follows: 152,487 motorcycles (February 2013: 108,533 units; up 40 percent) and 176,034 scooters (February 2013: 119,911 units; up 47 percent) during the second last month of the ongoing financial year. HMSI has recently announced its fourth plant in Gujarat, which is set to be operational by 2015. The company claims to have a domestic market share of 26 percent for its performance in February 2014.

Bajaj Auto reported total motorcycle sales of 273,323 units (including exports) during the month as against 291,297 units sold in February 2013, down by 6.17 percent.

TVS Motor Company recorded total domestic sales of 147,580 units in February 2014 as against 142,800 units sold in February 2013, up 3.35 percent.

Meanwhile, growing by 32.5 percent in February 2014, India Yamaha Motor posted total domestic sales of 42,489 units (February 2013: 32,097 units). Aiming at boosting scooter sales, it has launched another 113cc scooter Alpha (its third scooter offering) at the Auto Expo. Roy Kurian, vice-president, sales and marketing, IYM, said, “Our robust results can be attributed to our strong product portfolio.”

Mahindra Two Wheelers sold 17,848 units (February 2013: 5,619), mainly driven by the burgeoning sales of its Centuro commuter motorcycle. Over the past few months, the company has been aggressively expanding its sales and service network to over 1,000 touch-points across the country. 

COMMERCIAL VEHICLE SECTOR also stays in the slow lane

The commercial vehicles and the M&HCV segment in particular continue to witness poor monthly sales numbers. February numbers were down and there is no clear sign of revival in the near term. The current slowdown has seen a historical slump in demand, massive discounting and inventory pile-up, putting enormous pressure on the financials of truck makers.

However, while OEMs are finding it tough to push sales to clear stock, there is good news for fleet operators as freight rates on trunk routes have increased. During January, freight rates went up by 6-8 percent and  the momentum continued during February too as freight rates rose between 3-4 percent. This resulted in higher utilisation of the existing fleet instead of new purchases by fleet operators. The four percent cut in excise duty hasn’t really cheered the market mainly due to heavy discounting by OEMs.

According to Marc Llistosella, MD, Daimler India Commercial Vehicles, 2014 will continue to be a difficult year for the industry with recovery expected only after the Q2 of 2015. He added that about 40,000-50,000 trucks from various OEMs are lying idle at stockyards and most truckmakers have scaled down production.

Talking to Autocar Professional, S P Singh, senior fellow and coordinator, Indian Foundation of Transport Research and Training (IFTRT), said that the recovery in truck sales is still far away.

According to Singh, due to huge discounts on new trucks, the resale value of trucks has dropped considerably. Therefore, truck owners are delaying new purchases and instead retaining old trucks beyond the typical period of 4-5 years just to avoid the burden of repaying EMIs for new trucks. This has impacted new truck sales.

Yet according to Singh, fruit and vegetable production in most Indian states have reached peak level and will see a 15-20 percent increase in production, which in turn will generate an additional 25-30 percent demand cargo load for operators during the coming fiscal.

Tata Motors, the largest CV maker in the country, sold 21,927 units, down 42.33 percent on the 38,021 units it sold in February.

Chennai-based Ashok Leyland, which sold a total of 6,830 units in February 2014, recorded a drop of 28 percent (February 2013: 9,513). The decline was seen in both M&HCV and LCV sales.

Mahindra & Mahindra’s 4-wheeler commercial division, which sells the Maxximo, Gio, genio and Bolero PickUp, dispatched 13,293 units in the month, up 4.25 percent (February 2013: 12,751). The heavy truck arm, Mahindra Trucks and Buses recorded a fall of 40 percent, the company selling 605 units last month against 1,008 units sold in February 2013. 

VE Commercial Vehicles also saw a decline in sales. The company sold 2,531 units (February 2013: 3,538), down 28.5 percent.