June 2, 2013: The consumers, they are just not biting. A poor economic climate, high interest rates and fuel prices have created an environment of deferred purchases. Not surprisingly, for the seventh month in a row, passenger car sales have taken the slow lane with most manufacturers reporting declines in their May 2013 sales over those a year ago.
Even as the government’s Central Statistics Office revealed data that indicates that growth of the Indian economy has hit a decade low of 5 percent in 2012-13, in what could be an affirmation of the really tough times for the automobile industry, Maruti Suzuki, India’s largest carmaker, has reported a sales decline of 13 percent in May 2013. The company sold a total of 77,821 units (May 2012: 89,748). Other than its entry level quartet of the 800, Alto, A-star and the Wagon R hatchbacks, which notched 5.1 percent growth thanks to the renewed consumer interest in petrol cars (31,427 units versus 29,895 units in May 2012), and the SX4 which rose 24 percent on a very small base of 405 units last May, all other Marutis have taken a beating.
The Swift-Estilo-Ritz combine is down 29.4 percent with sales of 17,147 units (May 2012: 24,290) but the shocker is the consistently well-performing and Maruti sales star, the Dzire saloon has, for the first time, seen a fall: down 2.5 percent with sales of 17,265 units (May 2012: 17,707). Clearly, the recently launched Honda Amaze is not good news for Maruti as it has eaten into sales of the Dzire.
Maruti’s utility vehicles have also taken a hit last month with sales down 44.3 percent to 4,307 units (May 2012: 89,734). This means the high-selling Ertiga (which is clubbed with the Gypsy and Vitara in the UV category) too is seeing its fortunes down at the showrooms.
No 2 player, Hyundai Motor India registered flat sales of 32,102 units (May 2012: 32,010). Mahindra & Mahindra recorded a 5.5 percent increase with sales of 22,244 units (May 2012: 21,154). Speaking on the monthly performance, Pravin Shah, chief executive, automotive division, Mahindra & MahindraLtd,said, “We have achieved an overall growth of 5 percent in our domestic volumes during May 2013 for our automotive sector, in spite of a challenging environment. The growth in capital investment and private spending has also slowed down, which is a cause for concern. At Mahindra, we remain cautiously optimistic of the situation and do hope that on the back of the new product launches, the auto industry will rev up sooner than later”.
Honda Cars India drove into No 4 position, thanks to demand for its recently launched Amaze saloon. The Japanese carmaker, which has gone past Tata Motors and Toyota Kirloskar Motor, sold a total of 11,342 units (May 2012:10,334), with nearly 6,000 of being accounted for by the Amaze which has both petrol and diesel variants. Honda Cars India, which other than the diesel engine for the Amaze has an all-petrol model line-up, is also benefiting from the reducing price gap between petrol and diesel. However, given the demand for the Amaze and a limited production capacity, HCI will have to fast ramp up capacity for the saloon to avoid a demand-supply mismatch.
Meanwhile, Toyota Kirloskar Motor’s sales fell 35 percent; the carmaker sold 10,023 units (May 2012: 15,501). Tata Motors’ bad showing in the domestic market continues as the company’s May 2013 sales were down 45 percent to 11,134 units (May 2012: 20,503).
General Motors India sold 8,500 vehicles in the month, up 40 percent (May 2012: 6,079). These included 2,851 units of the Chevrolet Sail saloon, 2,177 Enjoy MPVs, 1,506 Beat hatchbacks and 1,475 Tavera SUVs. Commenting on the performance, P Balendran, vice-president, General Motors India, said, "We were able to register this growth only because of the good response to our newly launched vehicles, the Chevrolet Sail and Enjoy. Economic activities have almost come to a standstill and the market remains completely depressed due to negative sentiments and other structural bottlenecks. There is no show-room traffic and the enquiry levels have bottomed out despite introducing innovative marketing schemes. With no indication of a visible growth signal in the offing, we do not expect the market to pick up even in the coming months. Probably a good monsoon can bring in some cheer to the market.”
Renault India, hard-charging on the consistent demand for the Duster SUV sold a total of 6,300 units in May 2013, the Duster accounting for 5,146 units, the Scala 670 units, Pulse 410 units, Fluence 71 units and Koleos 03 units.
Two-wheelers too feel the heat
In a sign that the slowdown is here and present, Honda Motorcycle & Scooter India, which has been notching handsome growth for the past year, has recorded 3.37 percent growth in its May 2013 sales. It sold 229,006 units (May 2012: 2212,549). In April 2013, the company has posted 31 percent growth, its highest ever. On May 28, HMSI inaugurated its third manufacturing plant in India at Narsapura Area in Karnataka, which hikes its total capacity to 4 million units per annum.
Bajaj Auto registered a 2.60 percent increase in sales, selling 212,129 units in May 2013 compared to 206,751 units in May 2012. The company says it is recording good sales of new Discover variants launched in recent months.
TVS Motor Co’s sales fell 7.85 percent. The company sold a total of 140,046 units in May 2013 in the domestic market (May 2012: 151,980). While motorcycle sales increased by 4 percent at 66,606 units in May 2013 against 64,134 units in May 2012, scooter sales fell 13 percent to 33,747 units in May 2013 as against 38,833 units a year ago.
Meanwhile, Yamaha Motor India Sales posted a growth of 30 percent in sales during May 2013, selling 34,104 units in May 2013 (May 2012: 26,287.
While SIAM has forecast that the recovery in vehicle sales should start sometime around Q3 of 2013-14, automakers are bracing themselves for the coming months and hoping there’s a good monsoon that will help drive sales, particularly across rural India, in the near term. What should help matters is that the meteorological bureau has forecast a normal monsoon.
Meanwhile, government-owned oil marketing companies (OMCs) raised the prices of petrol and diesel as the rupees hit a 10-month low versus the dollar, which makes oil imports costlier. While the price of petrol per litre has gone up by 75 paise, that of diesel is up by 50 paise. The petrol price increase is the first in three months; it was last raised on March 1 and since then the price of the fuel has fallen by nearly 8 per litre due to fallen global crude prices and a strong rupee.