February passenger sales not good news, bad news Marches on

Is 2013 going to be the worst in terms of vehicle sales is 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 announced on March 1, there’s little to cheer about. Furthermore, to add insult to injury, state-run oil marketing companies raised petrol prices by Rs 1.40 per litre, effective March 1, exactly a fortnight after they were raised by Rs 1.50 a litre on February 16.

Given the preliminary passenger car sales data that OEMs revealed between March 1-3, it is clear that February 2013 will post an overall 18-20 percent sales decline, which could even further downgrade industry body SIAM’s revised growth estimate for this segment. 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 continuing bugbear for OEMs. Also, compared to earlier years, February did not see the usual rush of buyers queuing to buy new vehicles 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 to 15.87 percent to 41,311 units (February 2012: 49,104) and those of its compact cars (Estilo, Swift, Ritz) fell 14 percent to 24,021 units (February 2012: 27,899). What helped the carmaker was the 21 percent increase in sales of its popular midsizer Dzire to 18,316 units (February 2012: 15,068). The Ertiga continues to drive new gains in its segment, selling the bulk of the 5,957 units sold in the UV category which includes the Gypsy and grand Vitara.

Hyundai Motor India, the No 2 player, 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," remarked Rakesh Srivastava, vice-president (sales and marketing), HMIL.

But the biggest fall in sales has been Tata Motors which posted a decline of 74.9 percent, selling 10,613 units (February 2012: 40,961). Sales of the Nano, Indica and Indigo range stood at 7,769 while the Sumo, Safari, Aria and Venture sold a total of 2,844 units. 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 Innova and Fortuner have been impacted 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 duty levied on SUVs and UVs, the market will be further impacted.”

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. 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 3 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.”

Meanwhile, General Motors India posted a 20.2 percent decline in sales to 7,106 units (February 2012: 8,901). P Balendran, VP (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 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 carmaker 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 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. Nevertheless, with the big-selling Duster SUV (it sold 5,590 units in February 2013) escaping the Budget tax, the company can expect greater numbers to come its way.

Two-wheeler sales chug on

Hero MotoCorp, the No 1 two-wheeler player, saw its February 2013 sales contract by 4.2 percent to 501,271 units (February 2012: 523,465). Meanwhile, a hard-riding Honda Motorcycle & Scooter India continues to be in positive territory with sales of 228,444 units (February 2012: 206,043), up 10.9 percent. TVS Motor Co, with sales of 160,895 units, posted a decline of 4.8 percent (February 2012: 168,996).

On March 4, Bajaj Auto revealed its numbers for February. The bikemaker sold a total of 291,297 units (including exports (February 2012: 301,961), down 4 percent year on year. Its 11-month April 2012-February 2013 cumulative sales are 3,490,068, down one percent on the 3,353,557 units sold in the year-ago period.