Indica, M800 sales dip as competition hots up

SIAM 2007-08 results reveal tough times in the small car segment, marginal growth for commercial vehicles and a slowdown for two and three-wheelers. Competition in the small car segment has turned much tougher, as was evident in the annual sales results announced by the Society of Indian Automobile Manufacturers (SIAM). Despite a cumulative growth of 12.17 percent in the passenger car segment during April 2007-March 2008, companies like Tata Motors and Maruti Suzuki showed a decline in domestic sales for their small cars.

Tata Motors’ Indica recorded a drop in domestic sales from 1,44,690 units in 2006-07 to 1,35,642 units in 2007-08. It was the only decliner in the compact category. Maruti Suzuki also had a tough time in the mini-segment where its Maruti 800 sold 69,553 units in 2007-08 as compared to 79,245 units the previous year. In the compact car segment, the company sold 4,99,280 units in the domestic market for 2007-08, as compared to 4,40,375 units the previous year. Maruti Suzuki models that fall in the compact segment include the Alto, Wagon R, Zen and the Swift.

But what has come as a surprise in the compact segment is that its domestic sales for the month of March 2008 have shown a decline. For the month, it sold 41,869 units as compared to 47,068 units sold in the previous year. “Some of the challenges for the passenger car industry include availability and cost of finance, tougher lending norms, rising raw material prices and manpower cost and also inflation and rising cost of ownership,” said Dilip Chenoy, Director General of SIAM.

Chenoy did, however, say that there were several growth drivers for the industry which included an increase in disposable income, changing demographics, excise duty reduction for small cars, infrastructure development and a rural thrust wherein there has been an improvement in distribution in rural areas with new models.

Mixed results have come in from domestic sales from the midsize and premium segments. In the midsize segments, while four companies showed a decline in sales, five manufacturers recorded an improvement. For Fiat India, combined sales fell to a dismal 81 units as compared to 609 in 2006-07. Meanwhile, sales for Ford models like the Ikon, Fusion and Fiesta slipped by more than 10,000 units during the year. GM’s Chevrolet Aveo too performed badly while the Lancer, Cedia and the Ambassador from Hindustan Motors declined by 2,000 units. Maruti Suzuki was the clear winner here with domestic sales of 49,335 units as compared to 29,697 units for the Esteem, Baleno, SX4 and Dzire.

In the premium segment, BMW sold 850 units combined in 2007-08 as compared to a mere 65 units the previous year. The only other company to show a positive growth in this segment was Mercedes-Benz with its E-Class which sold 1,026 units (937 last year). Honda’s Accord, Skoda Auto’s Superb and Toyota’s Camry all showed a decline in domestic sales. In the luxury segment, both BMW and Mercedes registered increases in sales of the 7 Series and the S-Class respectively.

Marginal growth for commercial vehicles, slowdown for 2 & 3-wheelers

The commercial vehicles segment grew marginally at 4 percent. While medium and heavy commercial vehicles declined by 1.66 percent, light commercial vehicles recorded a growth of 12.29 percent. Tata Motors continued to get a huge response for its Ace vehicle in the LCV segment wherein its goods carriers sold 1,01,847 units in the domestic market as compared to 90,629 units the previous year. The company also exported 14,501 units in the last fiscal year.

Three-wheeler sales fell by 9.71 percent with sales of goods carriers dropping drastically by 20.49 percent while passenger carriers fell by 2.13 percent during fiscal 2008 compared to the last year. The dominance of sub-one-tonne four-wheelers seems to have dented three-wheeler sales in the domestic market. Both in the passenger carrier segment and the goods carrier segment, almost all companies recorded negative growth. Piaggio was the only manufacturer to record sales of 90,478 units (77,420) in the less-than-one-tonne passenger carrier three-wheeler segment.

Two-wheelers registered a negative growth rate of 7.92 per cent during this period, with the motorcycle and electric two-wheeler segments declining by 11.90 percent and 44.93 percent respectively. However, the scooters and mopeds segment grew by 11.64 percent and 16.63 percent respectively. Rising input costs, availability of finance, especially in semi-urban and rural areas and cost of finance were some of the challenges faced by two-wheeler manufacturers, said Chenoy.

Exports record growth

Automobile exports registered a growth of 22.30 percent during the 2007-2008. The growth was led by the two-wheeler segment which grew at 32.31 per cent. Commercial vehicles and passenger car exports grew by 19.10 percent and 9.37 percent respectively. Exports of three-wheelers declined by 1.85 per cent.