Auto Industry Makes Hay While Economy Shines

The Indian automobile industry posted a spectacular growth of 32%, powered by improving economic environment, gradual dissipation of job & business uncertainty, new offerings and good consumer spending in urban and rural India.

The upbeat market sentiment spanned all segments of motor vehicles, with passenger vehicles, commercial vehicles, two-wheelers and three-wheelers - all recording decent double-digit growth.

Passenger vehicles, continuing its good run, stole the limelight by notching up 35% rise in domestic sales. While Maruti Suzuki remained the numero uno without much of a challenge and recorded spectacular sales numbers, new players in the segment such as Ford Motor, General Motors and Volkswagen too benefited from a robust demand for their recently launched small cars - Figo, Beat and Polo.

Riding on the continuing strong performance of industry and the increased pace of infrastructure development, commercial vehicles sustained the momentum of the last six months during May, growing by a whopping 57.7% in domestic market. The smart growth numbers of CVs were, to a great extent, aided by the low base of the previous year, though.

Similarly, two & three wheelers were also in fast lane, witnessing growth of 28.7% and 10.3%, respectively, in domestic sales volumes. As the effect of economic recovery and huge Government's spending in social & rural sectors becomes pronounced and visible, the rural & semi-urban markets are going to play a significant role in propelling the growth of 2-wheelers and passenger vehicles, backed by rising aspirations of people in these areas.

Car market leader - Maruti Suzuki India Limited that sells one car out of every two cars sold in the country, crossed yet another landmark, clocking over one-lakh units of sales in a month for the first time. MSIL sold 102,175 units in May 2010, of which 12,134 units accounted for exports. Incidentally, the company's domestic sales tally of 90,041 units was also the highest ever in a month. The previous highest monthly domestic sale was 84,765 units in February 2010. Maruti Suzuki registered highest ever-domestic sales in A2, A3 and C segments respectively. A2 segment (comprising of Alto, WagonR, Estilo, Swift, Ritz, A-Star) grew by 16.6% to clock sales of 62,679 units. A3 segment (SX4, Dzire) rose by 60.5% to 10,883 units, while domestic sales volume in C segment (Omni, Versa, Eeco) at 12,953 units soared by 70% y-o-y during the month.

Hyundai Motor India Ltd (HMIL) stayed on course with its domestic sales at 27,151 units growing by 15.5% over the same month last year. HMIL's total sales for May'10 (including exports) stood at 46,808 units as against 43,624 units in May 2009, registering a 7.3% growth. The exports declined by 2.3% from 20,121 units in May 2009 to 19,657 units in May 2010. The segment-wise cumulative sales of HMIL during May 2010 were as follows: A2 segment (Santro, i10, Getz & i20) - 42,460 units; A3 segment (Accent & Verna)-4,310 units; A4 segment (Elantra) -1 unit; andA5 segment (Sonata Transform) - 37 units.

Commenting on HMIL's sales performance, Arvind Saxena, Director - Marketing and Sales, HMIL said, "Although the market continues to grow, we were constrained by our planned annual maintenance shutdown this month which restricted our numbers as we had to divert our export production to meet the demand for the domestic market. The demand for the i20 continues to swell, as demand has shot up by almost 35% following the launch of the new model and addition of two trims."

 
Thanks largely to its new offering Beat, General Motors India registered an impressive growth of 61%, selling 8,225 units against 5,109 units in May last year. The May 2010 sales comprised of 2,812 units of the Chevrolet Spark, 2,296 units of Chevrolet Beat, 1,418 units of the Chevrolet Tavera, 854 units of the Cruze, 396 Units of Chevrolet Aveo, 312 units of Chevrolet Aveo U-VA, 84 units of the Chevrolet Captiva and 53 units of Chevrolet Optra.

Tata Motors' domestic sales of commercial and passenger vehicles in May 2010 were 52,801 units, a 38% growth over 38,392 units sold in May 2009. Of this, commercial vehicles racked up 31,475 units - up 37% over 23,004 vehicles sold in May last year. While LCV sales at 13,755 units grew by 26.6% y-o-y, M&HCVs posted a 60.7% growth clocking 13,860 units during the month.

Passenger Vehicles Business Unit of Tata Motors reported a total sale of 21,477 units in the domestic market during May 2010, which translates into a good 38.9% increase compared to 15,459 units a year earlier. Domestic sales of Tata passenger cars at 21,326 units surged by 39% y-o-y. Sales of the Tata Nano were 3,550 units. The Indica range sales at 8,468 units witnessed a 15% slide, while the Indigo range logging 6,600 units grew by a robust 133%. The Sumo/ Safari range accounted for sales of 2,708 units, higher by 6% over May 2009.

Exports of Tata Motors at 3,978 units in May 2010 registered a growth of 121% compared to 1,804 units in May 2009.

Mahindra & Mahindra Ltd (M&M) clocked 13,476 units of its UV sales in domestic market during May 2010, growing by a healthy 67.8% over 8,033 units in May 2009. CV and 3-wheeler sales of M&M in domestic market were also on a high growth trajectory. While CV sales at 7,796 units were up 43.9%, 3-wheeler domestic sales volume increased by 59.4% y-o-y to 4,309 units during the month.

Continuing its uphill journey, Ashok Leyland (ALL) witnessed a stupendous growth of 252% with its domestic sales tally of 5,973 units during the month compared to 1,697 units a year earlier. The company's exports at 529 units also rose by a handsome 89% y-o-y.

In keeping with the buoyancy in auto market, all two-wheeler players posted spectacular sales numbers during May 2010.

Hero Honda Motors vroomed 13.7% to clock 425,058 units in domestic sales during May 2010 as against 373,870 units in May 2009. The company's exports also showed an impressive growth, rising by 23.5% to 10,875 units from 8,808 units recorded a year ago.

As with Hero Honda, Bajaj Auto recorded its highest ever May sales. The company's domestic sales figure of 191,726 two-wheelers surged by 68%, while two-wheeler exports adding up to 77,762 units leapfrogged 51 % y-o-y. The newly launched Discover 150 sold 12,377 units primarily in the four States of Delhi, UP, West Bengal and Andhra Pradesh. The bigger & sportier brands Pulsar (75,974 units) and Discover (107,076 units) represented 68% of Bajaj's motorcycle sales.

Domestic sales of Bajaj 3-wheelers at 11,752 units were in negative terrain and slipped marginally by 6.3% from 12,537 units a year back. However, 3-wheeler exports at 18,202 units expanding steeply by 156% enabled Bajaj Auto post, overall, a decent 52.5% growth in 3-wheeler numbers during the month.

TVS Motor Company sustaining the scorching pace across all segments in which it is present, saw its total two-wheeler sales (domestic + exports) climb up sharply by 30% from 118,574 units in May 2009 to 154,667 units in May 2010. Domestic sales of its 2-wheelers posted a 27% growth to 136,621 units during the month from 107,439 units a year ago. The exports of 2-wheelers too sustained a steady growth momentum increasing by 62% y-o-y to 18,046 units during the month.

Maintaining its upward growth trend, TVS three-wheeler business registered domestic sales of 1,877 units in May 2010 over 707 units in May 2009, clocking a healthy 165.5% increase.

Honda Motorcycle & Scooter India (HMSI)'s domestic sales of 2-wheelers during the month of May 2010 soared by 37% to 132,090 units; and its exports at 6,488 units, by 77.5% y-o-y. Other two-wheeler majors, viz. India Yamaha and Suzuki Motorcycle India too were in top gear.

The economic recovery is deepening as buttressed by the Index of Industrial Production that has consistently clocked 15% plus growth in the last six months, barring a blip in March 2010 when the growth dipped a tad to 13.5%. Encouraged by the performance of industrial output, the Government is confident of achieving 8.5% growth in GDP during 2010-11. This augurs well for the auto market. However, high level of inflation, particularly headline inflation sitting at over 10% and food inflation above 16%, can put damper on the market's optimism. Monsoon is going to play a critical role in combating inflation and sustaining the upbeat mood, as drought in the second successive year can render all calculations awry.