Auto Market on a Roll

Price Hike Fears Aid Robust Growth Numbers

Auto Sales continued to drive on a fast track in February as customers advanced purchases on fears of price increase due to anticipated 2% rise in excise duty in the impending Union Budget 2011. The budget left excise duty unchanged at 10% though. The market was undeterred by a slew of negatives like persistent high inflation, lukewarm IIP numbers for January, rising interest rates and likely petroleum price hike.

The month of February saw Indian auto industry come very close to the best ever total sales figure recorded in October 2010; passenger vehicle and CV segments, in fact, scaled new highs, bettering their respective monthly sales records. The domestic market posted a decent 21.32% growth in total sales at 13,70,932 units in Feb'11, which is the second best domestic sales volume for a month for the Indian auto market. The dispatches from factories may not be a true reflection of the sales at the retail level, though. Likewise, total sales, including exports, during the month of February rising by a healthy 22.1% y-o-y were also the second best in terms of monthly numbers.

Passenger vehicle segment continued to post strong numbers growing by 21 % y-o-y to 2,35,521 units in domestic sales during Feb'11, bettering the previous best of 2,33,994 units recorded only during the last month. Exports of passenger vehicles, which have been slowing down since the economic crisis that engulfed the entire world post Lehman collapse in the latter half of 2008 are on a comeback trail. Passenger vehicle exports at 43,799 units returned on the positive growth trajectory in February, growing by 20%, thanks to the incremental numbers contributed by Ford Figo.

There has been no stopping for two wheelers, even during the rough weather, given the mobility needs of huge population in a growing economy like India. Cashing in on the huge untapped market in rural areas and small towns, two-wheelers stayed in a fast-forward mode, posting a hefty 22% increase to clock 10.22 lakh units of domestic sales during the month of Feb'11.

Likewise, 3-wheelers and commercial vehicles also turned in decent sales performances. Three-wheelers were in fast lane with 49,082 units of domestic sales in Feb'11, growing by 24% y-o-y. The growth of commercial vehicles has been moderating of late due to the base effect. There was seemingly a modest 10.5% growth (compared to over 20% growth in other segments) in domestic sales of commercial vehicles units during the month. However, while this growth rate may not be flattering, domestic sales at 64,057 units and total sales tally of 70,482 units (including exports) in Feb'11 were the new monthly sales records for the segment. The same way, total sales tally of 3-wheelers (including exports) at 74,197 units in February was the best ever for a month.

As for the performance of individual manufacturers, the total sales of car market leader - Maruti Suzuki India Ltd (MSIL) climbed up 16% to 111,645 units in Feb'11 from 96,650 units a year ago. This includes 10,102 units of exports that continued to slide, witnessing a 15% fall in Feb'11 from 11,885 units a year earlier. Domestic sales volume of Maruti Suzuki grew by 19.8 % to 101,543 units.

The company's sales in A2 segment comprising Alto, A-Star, WagonR, Ritz and Swift grew 19.4% to 72,090 vehicles, while sales volume in A3 segment including SX4 and D'Zire surged 27% to 13,024 vehicles. C segment (Omni and Eeco) witnessed the sales growth of 26.9 %.

 
"It is a good thing that the FM decided to go in for consistency in taxation policy. With the excise duty rates being retained, we will not be hiking prices, as of now," Mayank Pareek, Managing Executive Officer, Sales and Marketing, Maruti Suzuki, said.

Hyundai Motor India Ltd (HMIL), while posting its second-best monthly sales in this financial year after Oct 2010, witnessed a none-too-impressive 5.3% growth in domestic sales at 32,629 units, as against 31,001 units in February last year. The company's domestic sales had risen by a meagre 2% in January. The exports stayed on a sticky wicket, dropping by 17.9% from 23,616 units in Feb'10 to 19,378 units in Feb'11.

The segment-wise cumulative sales of HMIL for the month of Feb'11 were as follows: A2 segment (Santro, MO, i20) -47,167 units; A3 Segment (Accent & Verna) - 4,685 units; A5 segment (Sonata Transform) - 29 units; and Santa Fe (SUV)-126 units.

Continuing on high-growth trajectory, Ford India came up with yet another astounding performance, clocking 188.3% increase in its domestic sales at 9,293 units in Feb'11 compared to 3,223 units a year ago. Exports too zoomed by a whoping 1,037% to reach 1,433 units compared to the corresponding figure of 126 units in 2010.

Ford Figo that celebrated its one-year anniversary in Mar'11 continued to draw customers to showrooms and has sold more than 76,000 units since its launch. "The phenomenal Figo has taken Ford to a new level in India," said Boneham, President & MD, Ford India."

Toyota Kirloskar Motor (TKM) posted a growth of 55%, selling 9,308 units in Feb'11, compared to 5,993 units in Feb'10. Commenting on the performance, Sandeep Singh, Deputy MD, Marketing, TKM said, "We are very happy with the growth registered this month. This is largely driven by the sale of Etios with 2,786 units. We have sold 4,844 units since its launch in Dec'10."

Moving apace with the trends, Tata Motors' posted total sales of 77,543 commercial and passenger vehicles (including exports) during Feb'11 growing by 12% over the corresponding sales tally of 69,427 vehicles in Feb'10. The company's domestic sales of Tata commercial and passenger vehicles stood at 73,039 units, a 10% growth over 66,190 units sold in February last year.

Passenger Vehicles Business Unit of Tata Motors witnessed sales of 31,909 units in the domestic market during Feb'11 -higher by 15% over February last year. The Nano sales at 8,262 units were higher by 101% y-o-y.

As regards its CV business, Tata Motors sold 41,130 units of commercial vehicles in Feb'11 - a 5% increase over 39,205 units sold in Feb'10. While LCV sales at 23,498 units were up 8%, M&HCV sales increased marginally by 1% y-o-y to 17,632 units during the month.

The company's exports at 4,504 vehicles in Feb'11 rose by 39% from 3,237 vehicles in February last year.

Ashok Leyland was in top gear growing by 25% y-o-y to record 9,800 units of sales including exports. Domestic sales grew by 27% to 8,984 units from 7,092 units a year ago.

Mahindra & Mahindra (M&M) posted a 12.3% growth in its utility vehicle sales in domestic market to 14,381 units during the month of Feb'11 from 12,801 units in Feb'10. The domestic sales of Mahindra CVs declined marginally by 1.1% y-o-y to 9,500 units, while the company's 3-wheeler sales volume comprising 5,725 units in domestic market soared by an impressive 57.2% y-o-y.

Out of tune with market trends, General Motors India (GMI) and Honda Siel Cars India (HSCI) were in negative terrain during Feb'11. GMI sold 9,303 units as against 11,111 units in Feb'10, recording a negative growth of 16.3%. Honda Siel's sales at 4,843 units during the month of Feb'11 were down 23% from 6,275 units sold during the same month last year. Model-wise sales break-up of Honda Siel Cars for the month of Feb'11 is: Jazz - 400 units; City - 3,668 units; Civic - 512 units; Accord - 242 units; and CR-V - 2 units.

Two-Wheeler players joined the party - all of them recording decent double-digit growth individually.

Hero Honda Motors Ltd continued to be on a roll, recording its highest-ever February sales. Hero Honda sold 4,72,055 units of two-wheelers in Feb'11, representing a growth of more than 23% over the same month last year, when the company had sold 3,82,096 units. This was, incidentally, the 10th consecutive month of 4-lakh plus sales for the company. The company's domestic sales volume of 4,62,953 units posted 24.3% growth y-o-y.

TVS Motor notched up a 26.7% growth in domestic sales of two-wheelers at 152,891 units. The company's two-wheeler exports were also in top gear clocking a stupendous 81.2% growth at 14,779 units.

Continuing its upward movement on growth curve, Bajaj Auto clocked 17% growth y-o-y in its domestic sales of 2-wheelers at 2,05,145 units during the month. Exports stayed on fast track, witnessing 38.4 % increase to 81,512 units in Feb'11.

Honda Motorcycle & Scooter India, India Yamaha, Suzuki Motorcycle India and Mahindra Two-Wheelers were also in fast lane, witnessing a substantial rise in their sales.

While the Union Budget has put at rest the speculation regarding increase in excise duty and various measures proposed in the Budget are expected to drive growth of auto market, the worries with regard to unrelenting inflation, rising interest rates, spiraling commodity prices including crude oil prices, and moderation in IIP growth numbers persist. All the same, the market sentiment remains upbeat.