Poor September sales reveal festive cheer is far away

October 2, 2012: The slowdown in vehicle sales is real and present. Coming on the back of a lacklustre first five months of the current fiscal, the poor September sales numbers will have got most manufacturers worried. A combination of increasing fuel prices, high vehicle finance rates and depressed market sentiment is translating into fewer footfalls in showrooms. Clearly, the festive cheer in the marketplace which OEMs are desperately awaiting is absent and the think-tanks at most OEMs will be actively looking at new ways to get buyers to loosen their purse-strings.

What’s more, this will come at the cost of substantial discounts and freebies. The saving grace for the industry were the numbers posted by India’s largest carmaker and Mahindra & Mahindra, which continues to ride the burgeoning demand for UVs and SUVs. Maruti Suzuki India, which is all set to launch its new 800cc Alto, posted a 13 percent increase with sales of 88,801 units (September 2011: 78,816).

This growth however is on September 2011’s smaller base when the carmaker was hit by labour unrest last year. While Maruti saw the sales of its hatchbacks – Swift, Ritz and Estilo – fall 10 percent to 17,813 units, the popular Dzire saloon did its bit to drive sales with a contribution of 11,694, an increase of 24 percent over its September 2011 sales. Another big seller was the Ertiga people-carrier which, along with the Grand Vitara and Gypsy, sold 7,224 units. These sales come after a month in which Maruti’s sales plunged 40 percent as a result of the month-long lockout in July-August 2012 at the Manesar unit. The company is now preparing for the launch of the new Alto 800. The 800cc replacement has been developed on the existing platform. The car’s mileage of 22.74km a litre, based on ARAI tests, makes it at least 15 percent more efficient than its earlier avatar. The car is likely to be priced at around Rs 15,000 to 20,000 more than the outgoing car.

The other OEM to drive into positive territory was Mahindra & Mahindra with 22 percent growth even as demand for SUVs continues to grow. The government had hiked diesel prices by Rs 5 a litre last month, which is likely to have some impact on sales of SUVs, the majority of which run on diesel, but the impact will not be huge. Speaking on the company’s overall performance, Pravin Shah, chief executive, Automotive Division, M&M, said: “We are happy with the performance and growth that we have achieved during September 2012. After the reduction in CRR, banks have started cutting lending rates and are also looking at reducing vehicle loan rates. We are hopeful of a good performance in the upcoming festive season”. The manufacturer has a good order book and the XUV500, which is clocking good sales numbers, currently has a waiting period of between 6-14 weeks in different parts of the country.

Also, the seven-seater Quanto mini-SUV, launched on September 20, has received 3,200 bookings. Furthermore, like a few other automakers which have announced price hikes, expect M&M to do the same soon. What is a cause of concern though is the sharp falling out of favour of hatchbacks for most automakers. Hyundai Motor India, the country’s second largest carmaker saw sales fall sharply by 14 percent to 30,851 units (September 2011: 35,955), its worst fall this fiscal with the i10 and Santro sales being particularly badly hit.

Tata Motors too was hit by the dip in consumer demand, with sales down 18 percent to 21,652 units (September 2011: 26,319). Meanwhile, Toyota Kirloskar Motor, which saw sales fall five percent to 12,115 units (September 2011: 12,807) reported a decline in its Etios hatchback and saloon range – 4,440 units as compared to 5,926 units sold in September 2011.However, what saved the carmaker from posting an overall sharper decline was a 23 percent increase in Innova MUV sales to 5,858 units and a 21 percent growth in Fortuner SUV sales to 1,301 units. Hero MotoCorp down 26 percent.

The poor market sentiment has not spared two-wheeler OEMs and market leader Hero MotoCorp too was down by 26 percent, selling 404,787 units compared to 535,636 units in September 2011.