India Sales Analysis: Passenger car sales plod in August

September 3, 2013: Passenger car manufacturers are keeping their fingers firmly crossed, hopeful that the abundant monsoon and the oncoming festive season will finally give them reason for cheer. The past nine months have been troubled times for most OEMs , a good number of them posting double-digit sales declines in August 2013. High interest rates, constantly rising fuel prices and an overall slowdown in the economy have been keeping potential buyers away from showrooms. For some players though, rising exports at a time of a falling rupee have been a welcome surprise. Maruti Suzuki India, the largest carmaker in India, registered total domestic sales of 76,018 units in August 2013, up 51.64 percent (August 2012: 50,129 units). However, the growth has to be seen against the background of a near-month-long shutdown of its Manesar plant last July-August as a result of worker strike due to which both production was adversely affected and subsequently vehicle deliveries delayed.

The entry level quartet of the 800, Alto, A-star and Wagon R sold 32,019 units last month (August 2012: 22,062), up 45 percent while the Swift-Estilio-Ritz sold 17,409 units (August 2012: 6,059), up 187 percent. The popular Dzire, which sold 13,723 units (August 2012: 3,085), was Maruti’s best-seller during the month. Among the UVs, the Ertiga was the best contributor to sales of 4,563 units (August 2012: 6,883), down 33 percent. Sales of the Omni and Eeco at 7,956 units were down 31 percent over the 11,593 units sold in August 2012.

On the export front, Maruti notched an increase of 180.9 percent, with sales of 11,305 units compared to 4,025 units in August 2012.

Hyundai Motor India recorded flat sales of 28,311 units in August 2013, a 0.19 percent growth (August 2012: 28,257). However, the company, which is India’s largest passenger car exporter, notched 28.87 percent growth in exports, shipping 24,008 cars (August 2012: 18,629). As a result, cumulative growth for the month was 11.58 percent, accounting for 52,319 units compared to 46,886 units in August 2012.

Commenting on the sales, Rakesh Srivastava, senior vice-president, sales and marketing, HMIL, said, “Exports have shown decent growth on account of strong demand from non-European markets while the domestic market continues to witness pressure. The overall market is suppressed due to various macro-economic factors. The frequent and steep increase in fuel prices continues to impact the already low market sentiments. We expect the challenge to continue in the coming months as well until there is a significant change in macro-economic policies.”

Mahindra & Mahindra’s Passenger Vehicles division (which includes UVs, Verito and Verito Vibe) sold 15,821 units in August 2013 (August 2013: 21,831 units), down 27.53 percent.

Commenting on the performance, Pravin Shah, chief executive, Automotive Division, M&M, said, “The auto industry, which is currently going through one of its most challenging phases, is in desperate need of some short-term fiscal stimulus. The weakening rupee, resulting in increased inflation, is impacting cost of operations. Immediate action by the government is needed so as not to lose out on the upcoming festive season wherein sales could look up and bring some cheer for the auto industry and add additional revenue to the government.”

Tata Motors sold a total of 11,564 passenger cars in August 2013, down 48 percent (August 2012: 22,311). Sales of the Nano/ Indica/ Indigo range during the month were 8,761 units while the Sumo/ Safari/ Aria/ Venture range sales comprised 2,803 units.

Honda Cars India sold 8,913 units in August riding on the performance of the Amaze that sold 6,242 units in the month. The company sold 8,913 units in domestic sales as against 5,470 units in August 2012, an increase of 63 percent.

The company has sold 28, 610 units since the beginning of the current fiscal year. It also exported 556 units in August. The break-up of local sales is as follows: Brio, 1508; City, 953, Accord, 62 and CRV, 148 units and Amaze, 6,242.

Jnaneswar Sen, senior vice-president, sales and marketing, HCIL said, "Our overall sales volume during August 2013 was quite robust. With the onset of festival season in West and South India, we have tried to maximise the production of the Amaze during August to be able to speed up the deliveries." The company had said its plans to start a third shift in November to cater to the demand for the Amaze.

Toyota Kirloskar Motor saw domestic sales of 12,007 units in August 2013, down 14.21 percent (August 2012: 13,995). Combined with exports of 3,194 units of the Etios series, total cumulative sales during the month were 15,201 units in August 2013, down 6.31 percent over sales a year ago. According to Sandeep Singh, DMD and COO, marketing and commercial, said, “With the rupee depreciation and rising inflation, we have increased the prices of the Camry Petrol and Fortuner by one percent. Last month we launched the Camry Hybrid, which is in line with offering advanced technology to our customers and encouraging the use of hybrids in India. The market is still sluggish; however, we hope to see the market improve with good monsoons and the upcoming festive season."

Ford India sold a total of 8,008 units in the domestic market last month (August 2012: 7,840), up 2.14 percent. Together with exports, it sold 11,065 vehicles (August 2012: 10,352), recording a 7 percent increase in August this year.

Ford India says significant customer interest in the recently launched EcoSport SUV helped deliver the company’s second-best sales month so far this year. “We’re thankful to Indian customers for their response to the all-new EcoSport. Despite the sustained difficult business environment, we have recorded our second highest monthly sales this year,” said Anurag Mehrotra, vice-president of sales for Ford India.

Continuing celebrations around the 300,000th Figo, Ford inaugurated two dealerships – Solan and Kochi – in line with its aggressive expansion plans in India.

Ford India also opened India’s second Quick Lane Service centre in Surat. Ushering in ‘No Appointment Necessary’ and ‘While you Wait’ Service, the new Quick Lane service centre is equipped to quickly handle routine vehicle maintenance and minor repair needs, providing a fast, convenient and customer-friendly channel enabling improved customer service. These new outlets take Ford India’s footprint to 265 sales and service outlets in 142 cities across the country.

“The opening of new dealerships in second- and third-tier towns shows how we’re committed to bringing world-class services and our lineup of global One Ford vehicles closer to our customers across the country,” Mehrotra added.

Renault India sold 3,733 units in August 2013, down 4.6 percent (August 2012: 3,916). The popular Duster SUV accounted for the bulk of sales -- 2,967 units, the others being the Scala (340 units), Pulse (405 units), Fluence (11 units) and Koleos (10 units).

“Macroeconomic factors such as inflation, rising interest rates, increasing fuel prices, unstable stock market and the devaluation of the rupee have been keenly felt in the Indian automobile industry, resulting in decreasing consumer demand and an overall de-growth of 9 percent so far this year. The Duster has been our flagship product for just over a year, playing a crucial part not just in Renault’s success in India, but also in spearheading the changing landscape of the Indian automobile industry” said Sumit Sawhney, executive director, marketing & sales, Renault India.

Two-wheeler OEMs feel the pressure too

Hero MotoCorp reported a sales increase of 3.65 percent with sales of 4,59,996 two-wheelers in August 2013 (August 2012: 443,801). Commenting on the sales, Anil Dua, senior vice-president (Marketing &Sales), Hero MotoCorp, said, “Registering growth in both retail as well as despatch sales despite weak market sentiments has come about due to several initiatives undertaken in recent times. Our five-year warranty program supported by strong communication campaigns and various ground-level activation initiatives has given a boost to our sales, particularly at retail level. Overall customer sentiment is not upbeat, but some segments like the 125cc and scooters are witnessing better growth. This has helped us maintain our clear leadership in the sub-150cc category even as we continue to gain market share in scooters. Going forward, the industry expects sales to pick up further on account of the good monsoons and the festive season. We are confident of sustaining this positive momentum in the coming month with a slew of launches from us heading into the festive season.”

Bajaj Auto, which has recently resolved a long-drawn-out labour issue at its Chakan plant, has reported a fall of 8 percent in motorcycle sales (domestic and exports) on a year-on-year basis to 278,583 units in August 2013 compared to 304,352 units sold in August 2012. In the year to date (April-August 2013), motorcycle sales are down 13 percent to 1,385,562 units compared to 1,595,833 units in the year-ago period.

TVS Motor Company, which sold 127,095 units in August 2013, saw sales dip 6.21 percent (August 2012: 135,513). The company says its motorcycle sales grew by 14 percent increasing from 53,673 units in August 2012 to 61,313 units in August 2013; scooters though registered a sales decline of 4.49 percent -- 36,478 units in August 2013 against 38,193 units in August 2012.

However, TVS saw its two-wheeler exports rise 40 percent with sales increasing from 15,227 units in August 2012 to 21,374 units in August 2013.