Auto Market Stays on High-Growth Trajectory

Auto market in India during the fiscal 2010-11 ended on a high note, posting record sales volumes on the back of steady economic growth and improving business confidence, as the rising disposable income with middle class and a slew of new product launches kept the demand strong. Even the rising interest rates, soaring crude oil prices, persistent high inflation and spiralling commodity prices including those of steel, rubber and other inputs that forced most of the vehicle manufacturers to increase prices, could not dent the market sentiment.

Total vehicle sales, including passenger vehicles, commercial vehicles, 3-wheelers and two-wheelers in domestic market for 2010-11, grew 26.17 per cent to 15,513,156 units from 12,295,397 units in the year 2009-10. It was a new high for the Indian auto market. The month of Mar'11 clocking domestic vehicle sales of 1,465,909 units registered a lower growth rate of 19.42 per cent y-o-y. The sales performance during March may have been dwarfed by 25%+growth in the previous 11 months of the fiscal, though, it was not bad either.

 
 
The FY'11 established a record of sorts, as it clocked new highs in terms of domestic sales and exports for all the four segments. A clutch of new offerings, steady performance of economy, rising income levels and increased pace of infrastructure development & housing activity helped all segments of auto market, viz. Passenger Vehicles (PVs), Commercial Vehicles (CVs), Two and Three-wheelers scale new peaks during the year.

Passenger vehicle domestic sales tally of 245,841 units during the month was a new high of monthly sales for the industry, so was the total sales figure of 296,938 units comprising domestic sales & exports. Domestic sales of passenger vehicle segment grew by 23.1% and exports by 26.9% y-o-y in Mar'11. It is encouraging to see that the exports are on a comeback trail. Mar'11 was the second consecutive month in which passenger vehicle exports have recorded a positive growth after a gap of a year.

The decent performance in March capped the excellent run of the PV segment in FY'11 that finished with a healthy growth of 29% y-o-y to 2.52 mn units. The strong performance of passenger vehicles comes amid reports that the India is set to become the sixth largest passenger vehicle producer in the world by Mar'12.

With economic recovery gaining traction, commercial vehicles also put up an impressive show during the FY'11 to finish with 676,408 units of domestic sales - up 27.3% over the previous year. The month saw domestic sales of commercial vehicles growing by 15.35% to 77,688 units and exports rising by 47% to 8,479 units.

Two-wheelers continued to move up the growth curve steadily as ever with domestic sales of 1.1 million units in Mar'11, which represented a 19.14% growth as compared to 920,154 units in Mar'10. Exports too increased by 14.4% y-o-y to 111,433 units during the month.

Likewise, 3-wheelers also finished the year with a decent performance in Mar'11. 3-wheelers witnessed 14.4% growth y-o-y to clock 46,147 units of domestic sales with total sales including exports rising by 17% to 66,501 units during the month.

The country's largest carmaker Maruti Suzuki India Ltd (MSIL) posted best monthly and fiscal sale numbers. Total sales, including exports rose to an all-time high of 121,952 units in Mar'11, clocking 28.2% growth y-o-y. Domestic sales were also a record high for the company that sold 110,424 vehicles in Mar'11, which translates into a 38.8% uptick y-o-y. The previous highest was 107,555 units in Oct'10. This was the fifth time the company crossed 1-lakh mark in domestic sales. The company's exports, however, stayed in negative terrain, declining by 26.1% to 11,528 units from 15,593 units in Mar'10.

MSIL’s sales volume in A2 segment expanded by 43.3% at 78,460 units and in A3 segment by 33.1% at 13,910 units in Mar’11.

Hyundai Motor India Ltd (HMIL) recorded a paltry 1% growth in domestic sales at 31,822 units in Mar'11 as against 31,501 units in March last year. While the domestic sales were virtually flat, the volume was the third highest for the company. The exports returned to the positive growth path during the month for the first time since Apr'10 rising by 0.8% y-o-y to 23,730 units.

The segment-wise cumulative sales of HMIL for the month of Mar'11 were as follows: A2 segment (Santro, 110, i20) - 50,488 units; A3 Segment (Accent & Verna) - 4,920 units; A5 segment (Sonata Transform) - 23 units; and Santa Fe (SUV) - 121 units.

Arvind Saxena, Director - Marketing and Sales, HMIL said, "With rising interest rates and increasing prices due to higher input costs, the market is less buoyant than what it was last year. HMIL has managed to grow in terms of overall volume, although the rate of growth has slowed down. In the second half of the year we expect HMIL sales to grow at a faster pace."

Continuing its upward journey, Ford India witnessed domestic sales of 10,485 vehicles in Mar'11 as compared to 9,478 vehicles in the same month last year, recording a decent growth of 10.6%. Exports too zoomed by 925% to 1,578 units compared to the corresponding figure of 154 units in 2010.

March was the highest selling month for Ford India and the second month in the last quarter, in which the company recorded 10,000 plus sales during a month in domestic market.

Ford India also crossed a milestone of 100,000 units in a financial year for the first time with Figo crossing sales-mark of 85,000 units since its launch in India in Mar'10.

"We are delighted to see our sales figures reaching 10,000 plus twice in the last three months - in January as well as in Mar'11 - making this our best-selling financial year ever," said Michael Boneham, President and MD of Ford India.

Ford India saw its exports growing by 15 times to 4,092 vehicles in Q1 2011 as against 280 vehicles in the previous corresponding Quarter. Figo commenced exports with 1,000 cars to Mexico - its third export market, in April. The car has already become popular in South Africa and Nepal, where it is already being exported.

Encouraged by the success of its existing models, Ford India unveiled the all-new global premium sedan Fiesta into India. The new globally acclaimed Fiesta's arrival marks the first in a series of eight new global products that Ford plans to introduce in India by the middle of this decade.

To further strengthen its service support, Ford India has been expanding its sales and service network across the country. The company's dealer network has increased to more than 170 outlets in 100 cities across India.

Tata Motors' total sales (including exports) of commercial and passenger vehicles were 83,427 vehicles, a growth of 11% over 75,438 vehicles sold in Mar'10. Domestic sales volume of Tata commercial and passenger vehicles added up to 77,502 units during the month, growing by 9% y-o-y.

Passenger Vehicles Business Unit of Tata Motors posted sales of 27,871 units in the domestic market during Mar'11, marginally lower by 1.3% compared to 28,231 units in Mar'10. The Indica range sales at 6,937 units plunged by 40% y-o-y.

Domestic sales of Tata commercial vehicles increased by 15% y-o-y to 49,753 units in Mar’11. LCV sales at 26,416 units grew by 18% over Mar'10. M&HCV witnessed 23,337 units of domestic sales, up 12% y-o-y.

The company's exports at 5,932 vehicles in Mar'11 rose by 45% compared to 4,105 vehicles in March last year.

Ashok Leyland Limited (ALL), during the month posted an all-time high monthly sales totaling 12,168 units, which reflected a 21% jump. Domestic sales grew at 11,312 units by 22 per cent over 9,299 units a year ago. The annual sales tally of 94,105 vehicles, surged by 47% y-o-y.

Mahindra & Mahindra (M&M) reported its highest ever monthly sales numbers, which aggregated 37,522 units during Mar'11, as against 31,698 units during Mar'10, clocking a growth of 18%. The company's highest ever domestic sales stood at 35,488 units during Mar'11 -higher by 19% y-o-y. It also achieved its highest ever export figure of 2,034 units, posting a 16% increase y-o-y.

Passenger Vehicle segment of M&M, comprising UVs and Logan, grew by 19%, having sold 17,320 units in Mar'11, as against 14,609 units during Mar'10, while Mahindra 3-wheeler sales during the month were up 32% y-o-y.

Rajesh Jejurikar, Chief Executive, Automotive Division, M&M said, "It is a matter of pride for us that Mar'11 has been a record month for both domestic and export sales in the history of Mahindra. We have also closed the financial year 2010-11 with an overall robust growth of 26%."

Contrary to the buoyant market trends, General Motors India (GMI) and Honda Siel Cars India (HSCI) witnessed negative growth during the month. GMI sold 9,391 units as against 11,330 units in Mar'10, recording a negative growth of 17%. HSCI sales saw a steep 39.7% slide to 3,576 units from 5,928 units in Mar'10.

Hero Honda Motors Ltd (HHML), the world's largest two-wheeler manufacturer for 10 consecutive years, reported 5-million-plus sales in a fiscal year for the first time, underlining the robust momentum that the company has sustained throughout the year 2010-11.

The company sold 54,02,444 units of two-wheelers during the year, translating into a growth of 17% plus over the year 2009-10, when Hero Honda had sold 46,00,130 units.

Having sold in excess of five-lakh units in two months earlier during the year, Hero Honda capped it off with 515,852 units in Mar'11 - its highest-ever month sales. This is a growth of more than 24% over Mar'10 that had witnessed 414,638 units of sales.

Monthly sales of Pleasure during the fiscal crossed the 30,000 units threshold, and continues to grow strongly.

Commenting on the sales performance, Pawan Munjat, MD & CEO, HHML said, "We are delighted with this year's sales performance, far surpassing our initial guidance of five million. Our growth rate is reflective of our strategic and marketing prowess, which has ensured our sustained market leadership.

"Hero Honda initiated strategic and structural changes this fiscal, which will begin to take effect in the near future. We are confident that our initiatives will allow us to build on our leadership position. We will actively look at exploring opportunities in newer markets, establishing a new brand identity and further enhancing our in-house resources. We will continue to work relentlessly to bring more value-added and innovative products to our customers, combined with innovative sales and marketing programmes," he added.

During the fiscal 2010-11, Hero Honda launched seven new offerings across segments, comprising a mix of new models, variants and refreshes. An attraction was the launch of Passion Pro Commonwealth Games Limited Edition. The bike was designed as a collector's item in order to celebrate Hero Honda's association with the Commonwealth Games Delhi 2010.

As a part of its commitment to promote sports in the country, Hero Honda was associated with various disciplines of sports, including cricket, golf, hockey, football and the Commonwealth Games.

TVS Motor Company registered a healthy 28% growth in its two-wheeler domestic sales during the month of Mar'11, clocking 191,208 units as against 149,34 units in the same month previous year. Exports increased 20% to 24,062 units as against 20,067 units in Mar'10.

Keeping the pace, Bajaj Auto Limited (BAL) clocked a 12 per cent jump in domestic sales in Mar'11 to 247,389 units from 244,910 units in the same month last year. The company's exports went up by 8.5 per cent to 54,308 units in March this year from 50,064 units in Mar'10.

Fiscal 2010-11 has been remarkable for the Indian auto industry that built on the recovery, which had started in the second half of 2009 after a slowdown for about 13 months in the wake of global financial meltdown. However, there are potential threats in the form of stubborn high level of inflation, rising commodity prices and continuing uncertainty in global economic outlook, which can dampen the upbeat mood. Unfazed, Indian auto market has continued to record healthy growth consistently in the last 20 months weathering these challenges. Vehicle sales are expected to reach 20-million mark this fiscal, helped by steady economic growth, rising aspirations and lifestyles of people, low penetration levels and outpouring of new launches.