Auto Market Presses Accelerator Pedal

It is raining vehicle sales this monsoon. Slowdown in the growth of industrial production in June 2010 notwithstanding, auto market continued to drive on expressway during July 2010, powered by new offerings, continuing easy finance availability & soft interest rates and constantly improving economic environment & receding job uncertainty.

The buoyancy was all-pervasive and all segments of market registered healthy double-digit growth. Domestic sales including 2-wheelers, 3-wheelers, passenger vehicles and commercial vehicles grew 31.5% to 12.37 lakh units in July. Exports too were on a high-growth trajectory except for passenger vehicles that witnessed a tepid 2.7% growth in exports, which could be attributed to withdrawal of scrappage incentive schemes introduced in late 2008 and 2009 by most of the European countries and sluggish recovery in Europe.

Passenger vehicles helped by buoyant sales of new offerings stayed on course with a robust growth of 36.9% in domestic sales at 202,093 units, crossing 2-lakh mark for the first time.

Riding on low base and increased pace of economic activity & freight movement, commercial vehicles continued their good showing of the last one-year through July 2010, their domestic sales rising sharply by 37% to 51,481 units from 36,222 units a year ago.

Two & Three-Wheelers too were in fast lane and maintained their high-growth momentum. While 2-wheelers notched up a robust 30.4% growth, 3-wheelers clocked a 25.4% increase y-o-y in domestic sales during July 2010.

Setting the pace, car market leader Maruti Suzuki India Limited (MSIL) sold a total of 1,00,857 vehicles in July 2010, including 10,743 units of export. This translates into a growth of 29.2% over the corresponding figure of 78,074 units in July 2009. This was the second time in this fiscal that MSIL's monthly sales figure crossed 1-lakh mark.

Domestic sales of Maruti Suzuki at 90,114 units in July 2010 were also the highest ever-domestic sales in a month and grew by 33.4% y-o-y. In the A2 segment, the sales grew by 33.2 % while in the A3 segment, sales were 1 3.7% higher, as compared to sales in July 2009. The C segment witnessed a whopping 86.5% growth over July 2009.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter continued to move up the growth curve. HMIL's total sales during July 2010 stood at 50,411 units as against 45,539 units in July 2009, reflecting a growth of 10.7%. Domestic sales, driven by the sustained demand for i10 and i20 and encouraging response to the recently launched Verna Transform, surged by 24.2% to 28,811 units during July 2010 from 23,193 units in the same month last year. In the process, Hyundai Motor India pipped Tata Motors to regain the number two spot in domestic passenger vehicle market, which HMIL yielded to Tata Motors in June 2010 by a narrow margin. However, HMIL's exports declined by 3.3% from 22,346 units in July 2009 to 21,600 units in July 2010.

The segment-wise sales (domestic + exports) of HMIL during the month of July 2010 were as follows: A2 segment (Santro, 110 & i20) - 44,522 units; A3 Segment (Accent & Verna) - 5,858 units; A5 segment (Sonata Transform) - 31 units.

 
Commenting on July 2010 sales, Arvind Saxena, Director -Marketing and Sales, HMIL said, "The recently launched Verna Transform along with the tried and trusted Accent helped us consolidate our position in the mid segment. The increased demand clearly shows that the recently launched Verna Transform has been well received by our customers. The market continues to be positive and we expect the trend to continue with the onset of the festive season in the next quarter."

Largest automotive player in India by revenue, Tata Motors stepped on the gas, recording a 41 % jump in its total sales (including exports) of commercial and passenger vehicles from 48,054 units in July 2009 to 67,799 units in July 2010. Domestic sales of Tata commercial and passenger vehicles during July 2010 were 63,558 units, a 39% growth over 45,599 units sold in the same month last year.

Passenger Vehicles Business Unit of Tata Motors clocked a total sale of 27,864 units in the domestic market during July 2010, which represents a healthy 62% increase over 17,356 units in July last year. This domestic sales tally of 27,864 passenger vehicles is the highest ever for Tata Motors, thanks to significant 9,000 units contributed by the Nano sales on commissioning of the company's plant at Sanand in Gujarat. The Indica range sales were 8,606 units, higher by 1% over July last year, while the Indigo range recorded sales of 7,007 units, a growth of 100%. The Sumo/Safari range accounted for sales of 3,251 units, higher by 22% y-o-y.

Tata Motors' sales of commercial vehicles in July 2010 in the domestic market added up to 35,694 units, rising by 26% compared to 28,408 vehicles sold in July last year. LCV sales at 20,438 units clocked a growth of 15%, while M&HCV sales aggregating 15,256 units, climbed up by 43% y-o-y.

The company's exports at 4,241 vehicles in July 2010 registered a 73% growth vis-à-vis 2,455 vehicles in July 2009.

Volkswagen brand clocked a total sale of 2,597 vehicles during July 2010 in India. Volkswagen Jetta has grown by 68% and the Passat 101% during the period Jan - Jul'10 as compared to Jan - Jul'09. The Volkswagen iconic New Beetle continued its growth momentum with customer deliveries reaching at 301 units for the period of Jan -Jul'10 and the Touareg at 69 units for the same period. Sales of Volkswagen's hatchback New Polo commenced in March 2010 and have posted 6,618 units of sale up to July 2010.

General Motors India (GMI) registered an impressive growth of 45% selling 7,124 units (including 55 units of export) during July 2010, compared to 4,914 units in June 2009. The July 2010 sales comprised 2,244 units of the Chevrolet Spark, 1,722 units of Chevrolet Beat, 1,546 units of the Chevrolet Tavera, 639 units of the Chevrolet Cruze, 375 Units of Chevrolet Aveo, 240 units of Chevrolet Aveo U-VA, 225 units of the Chevrolet Captiva and 133 units of Chevrolet Optra.

Driven by its latest offering Figo, Ford India clocked a staggering 307.2% growth in domestic sales at 8,739 units during July 2010. Exports at 799 units also contributed significantly to the overall sales tally of Ford India, which grew by 344.5% year-on-year.

Mahindra and Mahindra logged 12,059 units of UV sales in domestic market, growing by 3.4% y-o-y during July 2010. However, M&M's domestic sales of commercial vehicles (LCVs) at 7,067 units and 3-wheeler sales at 5,418 units were very much on track, growing by 16.8% and 42.4%, respectively.

Two-wheeler domestic sales in July 2010 at 9,38,514 units were an all-time high, surpassing the previous high of 9,36,555 recorded in May 2010.

Hero Honda, the world's largest two-wheeler manufacturer, yet again turned in a decent performance, posting an increase of 15.2% in domestic sales at 4,14,571 units in July 2010. The company's exports at 13,115 units were also on course, rising by a healthy 86% from the year-ago figure of 7,052 units.

Bajaj Auto, having gained traction, was in top gear, the company's domestic sales of two-wheelers leapfrogging by 75.2% to 1,92,138 units and two-wheeler exports at 87,643 units witnessing a 48.4% surge during July 2010, in spite of the production constraints.

Riding on high growth trajectory backed by expanding product line-up, India Yamaha Motor posted a growth of 30.3%, selling 29,728 units during July 2010 as against 22,807 units in July 2009. In domestic market, the company sold 22,899 units in July 2010 as compared to 17,316 units a year ago. The export figure stood at 6,829 units in July 2010, while 5,491 units were exported in July 2009.

Chennai-based TVS Motor Company vroomed by 32.6% with domestic sales of 1,43,039 two-wheelers during July 2010 as against the domestic sales figure of 1,07,883 two-wheelers in July 2009. The company's two-wheeler exports too witnessed a quantum jump to 20,067 units in July 2010 from the export of 13,082 units recorded a year earlier.

Likewise, Honda Motorcycle & Scooter India (HMSI) and Suzuki Motorcycle saw a healthy growth of 24.7% and 46.2% respectively in domestic sales during the month of July 2010.

Auto market has clocked healthy growth numbers in the first four months of the current financial year. As the higher base of previous year kicks in, the growth is likely to moderate, particularly in the case of commercial vehicles. However, going forward, the market outlook is very positive, thanks to the good monsoon, oncoming festival season and higher disposal income in the hands of consumers as a result of reduction in personal income tax in the last budget. On the flip side, inflation and supply constraints can put brakes on the runaway growth.