India Market Sales Analysis – February 2013

OEMs had already braced themselves to contend with lower sales in February 2013, but the Budget 2013-14 proposals and a petrol price hike will further hit growth.
Is 2012-2013 going to be the worst in terms of vehicle sales? It's a question most passenger car OEMs will be asking themselves. If January’s 12 percent year-on-year decline was bad, then February 2013’s numbers are even worse. And, with the finance minister targeting the dream run of the SUV segment with a three percent hike in excise duties in the Union Budget 2013-14, there’s little to cheer about. And, to add insult to injury, state-run oil marketing companies raised petrol prices by Rs 1.40 per litre, effective March 1, a fortnight after they were hiked by Rs 1.50 a litre on February 16. With the sales numbers for February out, passenger car sales have fallen by 25 percent while UV sales rose by 54.5 percent. Overall, total sales of vehicles across categories fell 5.45 percent to 14,51,278 units in February 2013 as against 15,34,910 units in February 2012.In January, SIAM had hugely lowered its passenger car sales growth forecast for 2012-13 to 0-1 percent from the earlier forecast of 10-12 percent. A sluggish economy, high fuel prices and high interest rates remain a bugbear for OEMs. Also, compared to earlier years, February did not see the usual rush of buyers queuing to buy new cars before Budget Day.

As usual, Maruti Suzuki India was the first automaker to reveal its sales numbers and, in what is a clear indication of the dismal situation in the marketplace, saw its February 2013 tally drop 9 percent to 97,955 units (February 2012: 107,653). For India’s largest carmaker, sales of its entry-level hatchbacks (800, A-star, Alto, Wagon R) fell 15.87 percent to 41,311 units (February 2012: 49,104) and those of its compact cars (Estilo, Swift, Ritz) declined 14 percent to 24,021 units (February 2012: 27,899). Model-wise, the Alto top-scored with 25,030 units sold, followed by the Dzire and Swift that totted up over 40,000 units in the month. What helped the carmaker was the 21 percent increase in sales of its popular midsizer, the Dzire to 18,316 units (February 2012: 15,068). The Ertiga continues to drive new gains in its segment, selling the bulk of the 5,842 units.

Hyundai Motor India, the No 2 player in the country, also saw its sales decline in February – down 7.6 percent to 34,002 units (February 2012: 36,805) even as its exports rose 37 percent to 20,663 units. “The market was depressed. There was a drop in enquiries with lower rate of conversions to purchase. The increase in fuel prices negatively impacted the already low market sentiments. We expect the challenge to continue in the next quarter following these moves in the Budget,” says Rakesh Srivastava, VP (sales and marketing), HMIL. Sales of the Eon appear to be on the uptick, with 8,717 units sold while the i10 and i20 sold 8,182 and 7,605 units respectively.

But the biggest fall in sales has been Tata Motors which posted a decline of 74.09 percent, selling 10,613 units (February 2012: 40,961). Sales of the Nano, Indica and Indigo range stood at 7,769 units while the Sumo, Safari, Aria and Venture sold a total of 2,844 units. While the Nano sold 1,050 units, the Indica sold 3,981 units. No Tata brand car has featured in the Top 10 for the month.
In a drastic change of fortunes, the company which was No. 2 last February has now slipped to fifth position now, behind Toyota Kirloskar Motor (TKM) which sold 12,756 units (February 2012: 16,659). TKM’s February sales too were down by 23.4 percent; its March sales will also be affected as after the Budget’s tax increase on SUVs, the company has immediately hiked the prices of its high-selling The Innova and Fortuner are now dearer by Rs 30,000 and Rs 75,000 respectively. Sandeep Singh, DMD and COO (marketing and commercial), said: “The market continues to remain sluggish and with the additional excise duties on SUVs and UVs, the market will be further impacted.”

For Mahindra & Mahindra, which was the biggest gainer in the past year due to the sustained above-50 percent growth in overall utility vehicle sales, its February numbers (both UVs and the Verito saloon) were a 14 percent increase at 23,421 (February 2012: 20,573). M&M will take the biggest hit in the coming months as the bulk of its model range will be impacted by the excise duty increase on UVs proposed in the Budget.
The pressure of sales will be felt particularly in rural India, which accounts for a good portion of the company’s popular Bolero and Scorpio models. Not surprisingly, the company isn’t happy with the Budget proposal. Pravin Shah, chief executive, automotive division, M&M, said: “Levying a three percent higher duty on the basis of higher ground clearance is disappointing as it slows down further growth and does not provide equal competitive space to all players.” The company’s recent product, the compact Quanto sold 2,099 units and being a compact SUV escapes the proposed excise duty announced in the Budget.
Meanwhile, General Motors India posted a 20.2 percent decline in sales to 7,106 units (February 2012: 8,901). The Beat sold 2,293 units while the Sail saloon launched a month ago sold 1,486 units. P Balendran, vice-president (corporate affairs), said: “With excise duty going up for certain categories of vehicles, the market is not expected to improve in the coming months as microeconomic uncertainties still continue.”

Ford India too is down, with a 44.1 percent decline in its sales of 4,490 units in February 2013 (February 2012: 8,035). The Figo accounted for 3,804 units. The company is gearing up to launch its much-awaited EcoSport SUV soon. Interestingly, this compact SUV model escapes the Budget definition of an SUV on which additional excise duty has been levied. Compact SUVs (under 4m in length) will remain in the excise duty slab of 12 percent, which is good news for the EcoSport.

Honda Cars India, which sold 6,510 units in February 2013, saw sales decline by 26.5 percent (February 2012: 8,856). The model-wise break-up comprises Brio (2,916 units), Jazz (185), City (3,271), Civic (21), Accord (62) and CR-V (55). Honda is working hard on plans to launch its Amaze midsizer soon and is understood to be working on an aggressive pricing strategy to squarely take on Maruti’s popular Dzire.

For Renault India, its February 2013 sales of 6,723 units (February 2012: 673) were a massive near-900 percent jump but that’s purely on a low base. With the big-selling Duster SUV (it sold 5,590 units in February 2013) also escaping the Budget tax, the company can expect greater numbers to come its way.
In the luxury segment, Audi India sold 775 cars,
up 29 percent on year-earlier month sales of 600 units. The carmaker plans to sell 10,800 cars this year, which will be a 20 percent increase over last year’s sales (2012: 9003 cars). “The year has started on a positive note for us with the successful launches of the new Q5 and the new R8 in January. We also introduced the petrol variant of the Q3 in February. The recent announcements in the Union Budget may dampen the spirit of customers. The increase in customs duty for imported cars (from 75 to 100 percent) and excise duty on SUVs was very surprising. We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer,” said Michael Perschke, head, Audi India.

Commercial vehicles feel the heat and how The long face of the Indian commercial vehicle industry grew longer with major players reporting further fall in sales. In February 2013, market leader Tata Motors recorded total CV sales of 47,839 units, down 7.77 percent YoY. However, spurred by the strong market performance of the Ace, LCV sales totalled 36,760 units versus 32,540 in February 2012. M&HCV sales plummeted 45 percent from 19,332 units last February to 10,629 this year. Cumulative sales for April 2012-January 2013 were 480,330 units. Cumulative LCV sales were 351,801 units, while M&HCV sales stood at 128,529 units.

In February, Tata Motors’ Jamshedpur plant rolled out its two millionth truck. The company also bagged an order for its fully indigenous 6x6 multi-axle high mobility mobile platforms from Bharat Electronics Ltd. The CV maker is to launch two new 45-seater buses for intercity and staff transportation in the MCV bus segment — the front engine luxury AC Intercity Coach and Luxury Staff Bus, in a phased manner soon. This bodes well for the company since Budget 2013-13 has expanded the JNNURM scheme by a further 10,000 buses for hilly states. For Ashok Leyland, its February 2013 sales, excluding the Dost SCV, fell by 26 percent compared to February 2012. Dost sales are averaging a healthy 3,000 units each month. Overall, the company sold 10,046 units in February this year, a 10 percent drop from 11,103 units last year. Cumulative sales (April 2012-February 2013) were 100,592 against 87,724 units a year ago, up 15 percent. The manufacturer has recently announced the development of an electric version of the Dost that is expected to roll out within a year, with at least three more variants in the pipeline.

Meanwhile, Eicher Motors’ sales of light and medium duty trucks fell 21.1 percent in February 2013 with sales of 2,361 units against 2,994 units in February 2012. Year-to-date sales also fell by 14 percent compared to last year. Heavy duty truck sales of 559 units in February 2013 were down by about 5.9 percent (February 2012: 594). Year-to-date HCV sales have fared a little better so far this year at 1,233 units (February 2012: 1,173), up 5 percent. Monthly bus sales were up 3 percent but notched 16.7 percent growth in year-to-date; 1,124 units between April-February 2013 as against 963 units for the same period a year ago.

Sluggish growth for two-wheeler players
Two-wheeler industry leader Hero MotoCorp yet again raked in sales of over 500,000 units in February, its fifth consecutive month of 500,000-plus sales since October 2012. However, though it recorded sales of 501,271 units, overall sales performance was down by 4.24 percent (February 2012: 523,465). On the scooter front, the company sold close to 54,000 units of Maestro and Pleasure scooters. Anil Dua, senior vice-president (marketing & sales), said: “ The industry did stage some recovery during the festival period but does not seem to have sustained the momentum. High interest rates, persistent inflation and delayed monsoons have all contributed to poor consumer sentiment.”

Slipping below the 300,000 sales figure, Bajaj Auto recorded motorcycle sales of 291,297 units (including exports) in February 2013, down by 3.53 percent YoY (February 2012: 301,961). Meanwhile, the YTD (year-to-date) sales (April 2012-February 2013) stand at 3,490,068 motorcycles (including exports and domestic), down 1 percent over 3,533,557 motorcycles sold between April 2011-February 2012. Honda Motorcycle & Scooter India (HMSI) continues to defy the demand slowdown in the market as it clocked sales of 228,444 units (February 2012: 206,043), up by 10.87 percent. While the company witnessed a growth of 30.7 percent on sales of 108,553 motorcycles in February 2013 (February 2012: 83,061), it did feel the heat in the scooter segment which was down by 2.5 percent at 119,891 scooters (February 2012: 122,982).

Hosur-based TVS Motor Company registered total domestic two-wheeler sales of 142,800 units in February 2013 (February 2012: 152,796), down by 6.54 percent. The company saw negative growth of 3.2 percent in the motorcycle category with sales of 60,985 units (February 2012: 63,019). The scooter segment too was down, by 16.6 percent as it sold 30,611 units during the month (February 2012: 36,693).

Meanwhile, riding on the success of its first scooter Ray, India Yamaha Motor reported an 18.66 percent growth in domestic sales in February 2013, selling 32,097 units (February 2012: 27,050).

Mahindra 2-Wheelers sold 4,010 units in February 2013, down 52 percent YoY. Cumulative YTD sales were 96,153 units. The company has rolled out its new 106.7cc, single-cylinder, four-stroke Pantero across Uttar Pradesh, Tamil Nadu, Gujarat and Maharashtra. However, the motorcycle will meet stiff competition from the well-entrenched players in the mass market segment.