India Market Sales Analysis - May 2013

The ongoing market slowdown is hitting carmakers hard with most OEMs posting lower sales and pinning their hopes on a good monsoon. Amit Panday reports.

The Indian automobile market, which grew at just over 2 percent in 2012-13, is one of the toughest to crack in the world and may be the toughest to sustain the growth trajectory. If the sales results of the first two months of 2013-14 are anything to go by, then vehicle manufacturers are bracing themselves for a tough year, with green shoots of recovery slated to show up only at the fag end of the fiscal.

Car buyers are preferring to delay their purchase decisions to later in the year. The combination of a sliding economy, rising fuel prices and high interest rates has reduced the footfalls in OEM showrooms considerably.

Like April 2013, May too saw sales take the slow lane with key OEMs posting lacklustre numbers. These included Maruti Suzuki India, Tata Motors, Toyota Kirloskar Motor and Ford India. Hyundai Motor India and Mahindra & Mahindra witnessed flat sales year-on-year. Reporting a decline of 13.03 percent in the month, Maruti Suzuki India sold 77,821 units as against 89,478 units sold in May 2012. The company saw growth of 5.1 percent in the mini-hatchback portfolio (M800, Alto, A-Star and WagonR), selling 31,427 units as against 29,895 units in May 2012. The Alto was dethroned from its position at the very top with sales of 16,411 units as against 17,265 units for the Dzire. A Maruti spokesman attributed this to a lack of entry-level buyer interest and the slowing down of the economy. Meanwhile, the SX4 saw a surge in its monthly sales to 503 units, a 24.4 percent growth albeit on a low base of 405 units sold a year ago. The trio of compact hatchbacks (Swift, Ritz, Estilo) however saw a drop of 29.4 percent, selling 17,147 units (May 2012: 24,290 units). The carmaker’s portfolio of utility cars which largely comprises the Ertiga MPV (along with Gypsy and the CBU Grand Vitara) also saw a fall of 44 percent with sales of 4,307 units in May 2013 (May 2012: 7,734 units).

Hyundai Motor India’s (HMIL) sales were flat at 0.29 percent – a total of 32,102 cars during the month (May 2012: 32,010 cars). “Hyundai has been able to maintain positive growth and will gain in market share in a market that is at the near-bottom level and is expected to move into positive growth in the coming months as the demand for petrol cars is improving,” hinted Rakesh Srivastava, senior vice-president, sales and marketing, HMIL. Mahindra & Mahindra (M&M) registered a near-flat growth of 5.15 percent in the sales of its passenger vehicles (Verito and UVs) by selling 22,244 units (May 2012: 21,154 units) during the month. It would be interesting to see how the recently launched Verito Vibe compact car, based on the Verito platform, sells during June 2013. The Verito sold 1,371 units in May 2013 while the Bolero sold 9,780 units.

Making it to No.4 in the pecking order, Honda Cars India (HCIL) sold a total of 11,342 cars during May 2013, up 9.75 percent (May 2012: 10,334). The recently launched Amaze, which is pitched at the Dzire, has done the trick for Honda and is not only powering the Japanese giant to notch healthy sales numbers month-on-month, but has also boosted Honda’s sales numbers to surpass Tata Motors and Toyota Kirloskar Motor in monthly rankings. Honda sold 6,036 Amaze cars (diesel and petrol variants) during May 2013 and has zoomed into the Top 10 for the month. The City sold 3,202 cars and the Brio sold 2,012 cars. HCIL, however, has to now work fast towards adding further capacity to the production line of Amaze model to avoid a demand-supply mismatch. JnaneswarSen, senior vice-president, marketing & sales, HCIL, said: “We expanded our operating universe with the Amaze which continues to receive great response from first-time buyers and consumers looking for a family car.”

Close behind HCIL, Tata Motors clocked in sales of 11,134 units during the month (May 2012: 20,503 units), down a massive 45.70 percent. The company sold 8,927 units of the Nano, Indica and Vista, Indigo range of cars and 2,207 units of the Sumo, Safari, Arai and Venture range of passenger vehicles during May 2013. The Indica was the sole Tata product in the Top 10 with sales of 5,500 units. The company has been registering a substantial slide in its domestic sales and clearly needs to work on a new car product pipeline.

Toyota Kirloskar Motor (TKM) saw negative growth of 35.34 percent and sold 10,023 cars during the month (May 2012: 15,501 cars). “We have corrected the dealer’s inventory levels and have been able to bring it down to less than 30 days,” said Sandeep Singh, deputy MD and chief operating officer, marketing and commercial, TKM.

General Motors India sold 8,500 cars during the month, up by 39.83 percent (May 2012: 6,079 cars). May 2013 sales include 2,851 units of Sail, 2,177 units of the Enjoy, 1,506 units of the Beat hatchback and 1,475 units of the Tavera. P Balendran, vice-president, GM India, attributed the growth in May to the response that the newly-launched vehicles such as the Sail and Enjoy have received. He said that there is no showroom traffic and enquiry levels have bottomed out despite introducing innovative marketing schemes.”

Renault India sold 6,300 units in May 2013, up by 1207 percent on a low base of 482 units sold during May 2012. The Duster accounted for 5,146 units followed by the Scala (670 units), Pulse (410 units), Fluence (71 units) and Koleos SUV (three units) during the month. “The growing acceptability of the Renault brand among customers is being driven by our strong product portfolio and extensive dealer network, while the Duster continues to retain the top spot as the most popular SUV in India,” said Sumit Sawhney, executive director, marketing & sales, Renault India.

Down by 33.70 percent, Ford India recorded sales of 4,002 units during the month (May 2012: 6,036 units). Anticipating the soon-to-be-launched Ford EcoSport as a game-changer, AnuragMehrotra, vice-president, sales, Ford India, highlighted that “despite the difficult industry situation, we are confident of the long-term potential of the Indian market.” Nissan Motor India sold 2,080 units in the month including 1,435 units of the Micra . The company will soon launch a refreshed Micra saloon that could be a boost to sales of this car.

Volkswagen India sold 3,056 units of the Polo while its saloon sibling, the Vento sold 1,653 units. Last month the company launched a sporty GT version of the Polo. Over the last few months, Polo sales have stayed steady at about 3,000 units a month. Audi India was the sole luxury carmaker to reveal its sales numbers; it notched sales of 710 units during May, up by 57.42 percent (May 2012: 451 units). Between January to May 2013, the luxury carmaker has sold 4,096 cars, up by 24.8 percent over the 3,282 cars sold in the year-earlier period.

Falling LCV sales a big worry for commercial vehicle makers
If slowing M&HCV sales were a concern, there is a greater worry headed CV makers’ way. The light commercial vehicle (LCV) segment, which has been the most resilient one and had bucked the downturn till now, has finally felt the pressure. Sales have slid into negative zone for the first time since April 2010.

Tata Motors: The country’s largest CV manufacturer’s dismal run continued in May 2013. Tata Motors sold 34,296 units in May 2013 (May 2012: 39,625), down 13.44 percent. LCV sales fell 11.9 percent to 24,173 units (May 2012: 27,174), which could spell a spot of trouble for the company considering that LCV sales account for an overwhelming 70 percent of its total CV sales. M&HCV sales too fell, down 18.7 percent — 10,123 units compared to 12,451 units last May.

Ashok Leyland: Like Tata Motors, Ashok Leyland too is feeling the pressure of slowing sales. The two companies together account for a little over two-thirds of CV sales in the country. In May 2013, Ashok Leyland’s M&HCV sales fell by 22 percent to 4,932 units (May 2012: 6,350). The Dost small CV, which has since the past year been propping up sales, barely provided any boost to overall numbers by registering a flat 1 percent growth. In the coming months, Ashok Leyland will look to drive up its numbers by introducing the passenger carrier-cum-small commercial vehicle, the Stile, on July 16. The refreshed Avia cab will be sold as the ‘Boss’ and launched later that month.

Eicher Motors: Eicher Motors’ CV and bus sales grew by a modest 2.8 percent in May even as buses continued to pull the number into the black. Combined sales of light and heavy duty trucks fell by 10 percent with the company selling 2,248 units (May 2012: 2,500). Light duty trucks recorded a drop of 3.4 percent, with sales falling marginally from 1,899 units in May 2012 to 1,833 units this year. Heavy duty trucks had a sharper fall of 30.9 percent, with sales of 415 units (May 2012: 601). Sales of buses registered a handsome 33 percent growth with Eicher Motors selling 1,240 units this May (May 2012: 932).

Two-wheeler OEMs too feel the heat
Number one player Hero MotoCorprecorded its highest ever monthly despatches of 557,890 units during the month. While the all-time high despatch sales for any single month came during a non-festival period, the company, however, saw a flat progression at 0.22 percent (May 2012: 556,644 units). The company has now sold more than 1.1 million units in April and May 2013 put together.Anil Dua, senior vice-president, marketing & sales, Hero MotoCorp, said: “The demand momentum that we had seen on our product range in April continued in May as well, helping us achieve over 1.1 million retail sales in the two-month period. This retail off-take has been helped by our star brands and also the recently-introduced five-year warranty on our entire portfolio.”

Honda Motorcycle & Scooter India (HMSI) posted a 3.37 percent growth with its May 2013 sales. It sold 229,006 units during the month against 221,549 units sold in May 2012. A fair evidence of demand slowdown is well indicated in the 4 percent drop in the sales of its motorcycles which stood at 91,283 units in May 2013 (May 2012: 95,423 units). Scooters, on the other hand, continued to tread a steady growth route, selling 137,723 units during the month, up by 9 percent (May 2012: 126,126 units). With the recent inauguration of its third plant in Karnataka, the company’s production capacity will increase to 46 lakh units by end-2013-14. Growing flat at 2.60 percent, Bajaj Auto sold 212,129 units (excluding exports) during the month (May 2012: 206,751 units). According to company sources, new Discover variants have given a good boost to the total monthly sales. On the other hand, selling 140,046 units during the month, Hosur-based TVS Motor Company saw a decline of 7.85 percent (May 2012: 151,980 units). Yamaha Motor India posted sales of 34,104 units during May 2013, up by 29.74 percent (May 2012: 26,287 units). Having recently launched the Ray Z and new variants of SZ bikes, the company expects to get a substantial boost in its monthly sales from this month onwards. SIAM has indicated that a recovery in vehicle sales could kick in by the third quarter of 2013-14. Meanwhile, automakers are taking stock of much-needed steps and going-to-market strategies to keep sailing through these rough times. Sources within the auto sector feel that only a significant fall in interest rates can contribute to a spike in sales as customers continue to stay away.