Tailwinds of peppy Q1 should power Indian car sales to a record FY2023
With estimated sales of over 800,000 units in April-June, the best yet since Q1 FY2019, the Indian passenger vehicle industry could surpass the previous best of 3.3 million units in FY2019.
July has dawned and brings with it the happy tidings of strong wholesales numbers from passenger car manufacturers, both in June and for the first quarter (April-June) of the fiscal year.
It’s the cause-and-effect relationship – a marked easing of supply chain issues, which have vexed OEMs for the past two-odd years, and enhanced reliability in availability of semiconductor chips means assembly lines are humming and dealer showrooms getting their share of what they – and the customer – want. What’s not to like?
The June 2022 sales numbers as announced by 10 of 16 PV manufacturers indicate cumulative wholesales of 306,162 units, which is a strong 26% year-on-year growth. Importantly, this 10-OEM tally betters the total PV industry sales of 231,633 units in June 2021 by 32%. Here’s looking at how the top carmakers fared last month
Maruti Suzuki India: 122,685 units / -1.28%
The PV market leader had a subdued June with sales of 122,685 units, down 1.28% on June 2021’s 124,280 units. One can pin this marginal decline to the ongoing issue of shortage of electronic components, which has had an impact on production, and it getting ready to roll out the new Brezza. Another production speed-breaker was the company observing its annual maintenance shutdown over a few days last month. In June 2022, the carmaker rolled out 140,478 units – 13.56% less than the 163,037 units produced in June 2021.
Nonetheless, the flush-with-SUVs market can be unforgiving to production gremlins and Maruti saw sales for its clutch of SUVs – Brezza, Ertiga, S-Cross, XL6 – drop 34% in June 2022. But expect the carmaker, which has an order backlog of 305,000 units in the domestic market, to soon get its production act in fast-forward mode and come out firing on all cylinders.
On June 30, the carmaker launched the 2022 Brezza, the second-generation model of the game-changing compact SUV, with prices starting at Rs 799,000 for the base LXi trim and going upto Rs 13.96 lakh for the top-spec ZXI+ AT variant (ex-showroom, India). It will be retailed via Maruti Suzuki's Arena dealerships and bookings are already underway. Deliveries are expected to begin soon. There’s plenty on offer but will the new Brezza breeze past its competition, given that it is priced higher than most if its petrol-powered rivals?
Hyundai Motor India: 49,001 units / 21%
India’s No. 2 carmaker by volume despatched a total of 49,001 units, up 21% from June 2021’s 40,496 units. While the popular Creta continues to power its numbers, the company is seeing fresh traction for its Venue which saw a refreshed model being launched on June 17 priced at Rs 753,000 (ex-showroom).
The Venue, Hyundai’s first compact SUV, drove past cumulative sales of 300,000 units in May 2022, a feat achieved in 35 months since launch. The promise of the Venue was revealed in the first six months when it clocked 50,000 sales albeit demand somewhat slowed down in subsequent months – 100,000 in 15 months, 200,000 in 25 months and 250,000 in 30 months. This can also be put down to the Venue being in the most hotly contested sub-segment of the UV market: compact SUVs where it rivals the Maruti Brezza, Tata Nexon, Mahindra XUV300, Kia Sonet and more recently the Nissan Magnite, Renault Kiger and Tata Punch. Importantly, the Venue is high on fuel efficiency and its frugal sipping habits is drawing more consumers in a time of wallet-burning fuel prices.
Tata Motors: 45,197 units / 87%
Breathing fire on the No. 2 player is the hard-charging Tata Motors with wholesales of 45,197 units in June 2022, a handsome 87% YoY increase (June 2021: 24,110). Having grabbed the No. 3 position a few months ago, Tata Motors is going all out to up the ante with its young PV portfolio, and the Nexon as the star performer.
The June 2022 numbers stand out given the fact that they are highest ever for the month. And, for Q1 FY2023 (April-June 2022), at 130,125 units, Tata Motors has notched robust 101% YoY growth (Q1 FY2022: 64,386). Given the booming SUV market, it is not surprising that the company sees its SUV portfolio account for 68% of its first-quarter sales this fiscal.
Electric mobility is also where Tata Motors is aggressively driving gains. Spearheaded by India’s best-selling EV – the Nexon EV – the carmaker despatched 3,507 units, up 433% on the 658 units of June 2021 and 2% on the month-ago 3,454 units in May 2022. Between April and June 2022, a total of 9,283 Tata EVs have been sold, marking 441% YoY growth (Q1 FY2022: 1,715). Do the math and it works out to 102 electric cars being sold on each of the 91 days in the first three months of the ongoing fiscal. Clearly, good going for Tata Motors, whose recently launched Nexon Max EV is also witnessing strong demand in the domestic market.
Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility said, “Demand for passenger vehicles continued to stay strong in Q1 FY23 even as the supply side remained moderately impacted due to the lockdown in China. Overcoming the challenges, Tata Motors posted record-breaking monthly sales (June’22) as well as quarterly sales (Q1 FY23). Going forward, we expect the supply side, including that of critical electronic components to progressively improve. We will continue to keep a close watch on the evolving demand and supply situation and take appropriate actions.”
Mahindra & Mahindra: 26,880 units / 59%
Mahindra & Mahindra continues to record strong growth. In June 2022, the company despatched 26,620 units, up a sizeable 59% YoY (June 2021: 16,913). However, month on month, June was down by 24 units or 0.08% on May 2022’s 26,904 units. Nonetheless, for the first quarter, total sales at 76,310 units constitute smart 77% YoY growth (April-June 2021: 43,202).
According to Veejay Nakra, President, Automotive Division, M&M, “Q1 FY2023 is our second consecutive highest SUV sales quarter. This has been made possible due to continued robust demand for all our brands including XUV700, Thar, Bolero and XUV300.”
M&M was in the limelight in June for a couple of other reasons: its flagship XUV700 won Global NCAP’s ‘Safer Choice’ award, thereby becoming the second Mahindra model after the XUV300 to do so. And on June 27, the company launched the second-generation of one of its long-time best-sellers: the Scorpio N.
Priced at Rs 11.99 lakh for the entry-level petrol MT and going up to Rs 19.49 lakh for the top-spec diesel-MT variant, the Scorpio-N is an all-new product designed at Pininfarina, Italy and Mahindra India Design Studio (MIDS), Mumbai and engineered by the teams at Mahindra Research Valley (MRV) near Chennai and Mahindra North American Technical Center (MNATC) in USA. Born of a Rs 1,600 crore investment, the new Scorpio which rolls out of the Chakan plant has a lot riding on it.
Kia India: 24,024 units / 60%
Kia India is on a roll. The Korean carmaker recorded sales of 24,024 units in June 2022, its highest ever monthly sales, and notched 60% YoY growth. The Kia Seltos and Carens lead the sales momentum with 8,388 and 7,895 units sold, respectively, followed by Sonet with 7,455 units and Carnival with 285 units sold.
Kia India remains a key contribututor to the OEM’s global sales and in June, India market sales contributed 9% (24,024 units) to Kia’s global sales 258,610 units in June (1.8% YoY). And India-market Seltos sales (8,388 units) accounted for 41% of Seltos’ sales in outside-Korea markets (20,545 units).
Toyota Kirloskar Motor: 16,500 units / 87%
TKM sold a total of 16,500 units in the month of June 2022, thereby registering a growth of 87% over wholesales in June 2021. The company also clocked a 26% growth in cumulative wholesales from January to June 2022, when compared to the corresponding period last year. In fact, half yearly cumulative wholesales have been the highest since 2019.
Commenting on the June sales, Atul Sood, Associate Vice-President, Sales, and Strategic Marketing, TKM said, “The past month witnessed huge growth in terms of wholesales, thanks to the very promising booking orders that most of our models enjoy. The new Glanza has received a tremendous response from our customers and continues to clock very promising booking orders. Both our self-charging hybrid electric vehicles, the Camry Hybrid and the Vellfire, have also received tremendous appreciation and a true testimony to that are our half yearly cumulative sales that have been the best in the last four years.
Segment leaders like the Crysta and the Fortuner continue to peak demand, and customer orders are on the rise. The Legender too continues to garner robust booking orders. Toyota is known for its SUVs worldwide and we at TKM are very excited about our upcoming foray into the popular B-SUV segment in India.”
Skoda India: 6,023 units / 721%
Nothing like a new product to give a new charge in a competitive market. And Skoda Auto India has got two of them: the Kushaq SUV and the Slavia sedan. Both dynamic products have given the Czech carmaker solid traction, proof of which is the 6,203 units chalked up in June 2022, up a massive 721% on a low year-ago base of 734 units. Not surprisingly, June numbers have set a new monthly sales record for Skoda in India.
Skoda's India 2.0 growth gameplan is focused on creating strategic pillars like building brand awareness for Skoda and improving customer satisfaction.
Zac Hollis, Brand Director, Skoda Auto India said, “Both our India 2.0 products have entered the market in an extremely challenging backdrop. A global pandemic, intermittent lockdowns, economic upheaval, geopolitical instability, and now a continued semiconductor shortage upsetting supply chain. So, it’s an incredible achievement for all of us at Skoda Auto India to continue breaking and setting new sales records. It’s the result of all-round work from all our teams. Not just in terms of the product, but in terms of customer satisfaction, a wider, deeper penetration of our all-new customer touchpoints and a series of consumer-centric service campaigns. Also playing a big role are our dealer partners who have done a stellar job. Together, we will ensure that 2022 will be our ‘Biggest Year’ in India.”
MG Motor India: 4,503 units / 26%
MG recorded sales of 4,503 units, up 26.56%, with the flagship Hector and ZS EV drawing monthly bookings of over 4,000 and 1,000 units respectively. According to the company, “The momentum in sales comes on the back of some ease in semiconductor availability, even though the outlook remains constrained in the wake of supply-chain roadblocks and persistent logistical headwinds.”
The company says it is taking all necessary steps to address the production and supply chain issues and expects the situation to gradually improve in the second half of 2022.
GROWTH OUTLOOK: VERY OPTIMISTIC
From the looks of it, FY2023 is going to be a good year for India Auto Inc, specifically India Passenger Vehicle Inc. Compare the first quarter FY2023 numberswith Q1-FY2022 (646,272 units), not so much with the Covid-impacted Q1-FY2021 (153,734 units), and Q1-FY2019 (712,684) and you’ll know why.
As per the numbers revealed by 10 OEMs for June 2022 – 306,162 units – and adding the official SIAM data of April-May 2022 sales of 502,703 units, one can take the Q1 FY2022 (April-June 2022) total to be 808,865 units, which is a smart 13.49% increase over the pre-Covid Q1 FY2019 numbers. The only quarter in the past 10 years when Q1 sales have gone past the 800,000-unit mark was FY2019 (see 10-year PV sales data table below) when Q1 sales totalled 873,490 units (up 20%) and that fiscal turned out to be the best yet for India PV Inc at 3.3 million units.
What’s driving the smart uptick in PV sales is the unabated boom in SUV demand. In FY2021, UV sales in India crossed a million units (or 10 lakh units) in a single year for the first time. In FY2022, the UV segment accounted for 48.51 percent of total PV sales, which means nearly every second car sold in India is a utility vehicle. No surprise then that every vehicle manufacturer worth its wheels aims to expand its footprint in this booming segment. At present, there are 31 OEMs with UVs in India, selling approximately 101 models which cumulatively account for a staggering 666 variants available with a consumer-friendly mix of fuels, engines and transmissions.
With UVs eating into hatchback and sedan sales, FY2022 saw the market share for passenger cars drop sizeably to 48 percent compared to 57 percent in FY2021. UV market share rose sharply to 48.5 percent from 39 percent in FY2021. Meanwhile, van market share reduced marginally to 3.7 percent from 4 percent in FY2021. Compare this with the 10-year ago scenario: in FY2013, UVs comprised 20% (553,660 units) of total PV sales of 2.68 million units, while cars (18,95,471) had 70.55% of the market with vans (237,298 units) having 8.83% share.
Given the pent-up demand in the market, the sizeable order backlog for top players like Maruti Suzuki, Hyundai, Tata Motors and Mahindra, the easing of the supply chain and chip issues and a continued surging boom for SUVs, it looks like the Indian car industry could be driving towards a record fiscal and even cross the 3.4-million-units mark. The caveat, of course, is that the industry maintains smooth production levels without supply chain hiccups, there is no fourth wave of the pandemic and that the overall economic scenario improves. Stay tuned for more updates.
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