Auto Sales Continue in a Fast-Forward Mode

Auto sales in June 2010 continued to drive merrily in fast lane on the back of improving economy, new launches, easy availability of affordable finance and competitive prices. Low base of the last year especially in the case of commercial vehicles and rising exports, except for passenger cars, also helped the growth numbers look robust. What is heartening for the auto industry and trade is that in spite of increase in prices of vehicles necessitated by new emission norms and rising commodity prices, the growth did not show any sign of slowing down, thanks to cheap funding fuelled demand and improving consumer sentiment.

The robust demand catapulted domestic vehicle sales in June 2010 by 31.4% per cent to 1,205,990 units from the domestic sales tally of 917,645 units in June 2009. As a result of the buoyancy, some of the vehicle models are witnessing a waiting period of 2 to 6 months for delivery. Vehicle exports too stayed on high growth trajectory, increasing by 45.8% to 202,422 units in June 2010, thanks to the significant export numbers logged by Bajaj Auto, Maruti Suzuki, Hyundai Motor India, Hero Honda, TVS Motor, India Yamaha Motors and HMSI.

Making most of the favourable macroeconomic environment, CVs vaulted by 44% to clock domestic sales of 52,211 units during the month as against 36,222 units a year ago. Exports at 5,419 units also grew sharply by 78.6% enabling CVs to post a decent 46.8% growth in June 2010 y-o-y.

Passenger vehicle market continued its steady growth with domestic sales in June 2010 at 181,810 units climbing up by 29.2% from 140,748 units a year ago. The passenger vehicle (PV) sales numbers were boosted by 8 new launches and 11 upgrades launched during the first quarter of the current financial year. However, PV exports witnessed a marginal 2.3% de-growth due to the slowing of exports to European markets as a result of the withdrawal of vehicle scrappage incentives in most of the countries.

In keeping with its steady performance over a period of time, barring minor hiccups occasionally, two-wheelers maintained their decent run with a healthy growth of 32% in domestic sales at 933,101 units and 59.7% in exports at 139,145 units during the month.

Car market leader, Maruti Suzuki India Ltd (MSIL) held steady to register total sales of 88,091 units, comprising sales of 72,812 units in domestic market and 15,279 units in overseas markets, in June 2010. This translates into an increase of 17.3% over the corresponding total sales figure of 75,109 units in the same month last year. MSIL’s domestic sales rose by 17.9% and exports by 14.6%. Maruti Suzuki's domestic sales volumes in A3 segment (comprising of SX4, Dzire) grew by 32.5%, in A2 segment (Alto, Wagon-R, Estilo, Swift, Ritz, A-Star) by 11.4%, and in C segment (Omni, Versa, Eeco) by 43.9%, y-o-y.

Hyundai Motor India Ltd (HMIL) that has been witnessing a steady growth, encountered a speed bump in its export performance. While HMIL's domestic sales in June 2010 at 27,366 units stayed on course to clock a 19% growth, exports at 18,888 units fell sharply by 22% y-o-y. HMIL ended up with a negative growth of 2% in its total sales figure of 46,254 units in June 2010 compared to 47,266 units in June 2009.

 
The company's segment-wise cumulative sales for the month of June 2010 were as follows: A2 segment (Santro, i10, Getz & i20) - 42,099 units; A3 Segment (Accent & Verna) - 4,137 units; and A5 segment (Sonata Transform) -18 units.

Commenting on the June 2010 sales performance, Arvind Saxena, Director - Marketing and Sales, HMIL said, "The domestic market continues to show a steady growth but the exports have slowed down especially in the ED countries in the absence of any fresh incentives from the respective governments there. Our new products have helped us grow the market here and the recent launch of the Verna Transform should help us improve our figures further in the coming months."

Primarily driven by the encouraging response to the recently launched Chevrolet Beat and Chevrolet Spark in the sub-compact segment, General Motors India posted an impressive growth of 114% in domestic sales at 9,494 units in June 2010 as against 4,429 units in June 2009. GM India's June 2010 sales comprised of 3,415 units of Chevrolet Beat, 2,911 units of the Chevrolet Spark, 773 units of the Chevrolet Cruze, 1,423 units of the Chevrolet Tavera, 398 units of Chevrolet Aveo, 387 units of Chevrolet Aveo U-VA, 139 units of the Chevrolet Captiva and 93 units of Chevrolet Optra.

Tata Motors sustained the growth momentum, notching up total sales of 67,730 units (including CVs, passenger vehicles & exports). This represents a growth of 49% over the sales figure of 45,440 units in June 2009. The company's domestic sales of commercial and passenger vehicles in June 2010 stood at 62,602 units, surging by 45% from 43,284 units in June last year.

Tata Motors' sales of commercial vehicles in June 2010 in the domestic market aggregated 34,791 units - a 33% increase compared to 26,245 units sold a year earlier. While LCV sales at 19,652 units were up 21 per cent, M&HCV sales volume of 15,139 units grew by 52% y-o-y.

Passenger Vehicles Business Unit of Tata Motors also maintained the uptrend with its domestic sales at 27,811 units in June 2010 recording a 63% increase compared to 17,039 units in June last year. With the commissioning of Tata Motors' plant in Sanand, Gujarat, Nano sales at 7,704 units contributed significant numbers to the growth enabling Tata Motors to re-claim the No. 2 position in passenger vehicle segment in the domestic market. The Indica range sales were 9,003 units - down 12%, while the Indigo range recorded sales of 7,502 units growing by 113% over June 2009. The Sumo/Safari range accounted for 3,602 units of Tata Motors' sales and registered a 9% growth y-o-y.

TML's exports at 5,128 units in June 2010 registered a growth of 138% over 2,156 units in June 2009.

Despite the annual shutdown in the first week of June, Mahindra & Mahindra (M&M's) saw its total vehicles sales grow by 20% to 27,562 units in June 2010 from 22,999 units in June 2009. Mahindra's UV sales in domestic market standing at 12,748 units in June 2010 were down a tad by 2.6% y-o-y, which may be misleading, for, the demand continued to be buoyant, while dealers were out of stock.

Ashok Leyland continued to consolidate and move up the growth curve, with its domestic sales at 7,499 units in June 2010, soaring by 115.6% over 3,478 units in June 2009. ALL's exports reading 901 units (488 units) were also on course with a growth of 84.6%.

Hero Honda Motors Ltd (HHML), the world's largest two-wheeler manufacturer, vroomed to clock 416,329 units of domestic sales during June 2010 as against 357,769 units in June 2009, witnessing a healthy 16.4% growth. The company's exports aggregating 10,125 units were also on fast track, climbing up by 27.1% y-o-y.

Bajaj Auto carried forward its spectacular sales performance of the previous months into June 2010. The company's domestic two-wheeler sales volume of 186,401 units during the month grew by 68.6% from 110, 574 units in June 2009. The company's two-wheeler exports at 96,407 units were up by handsome 66.5% y-o-y in keeping with its past performance.

Bajaj Auto's three-wheeler domestic sales in June 2010 were flat at 14,997 units vis-à-vis the sales of 14,902 units a year ago. However, the company's three-wheeler exports adding up to 17,617 units during June 2010 were in overdrive posting a whopping 79.2% growth over 9,829 units in June 2009.

TVS Motor Company continued from where it left off in the previous month, increasing its sales tally of 2-wheelers (including exports) by 36% to 156,685 units in June 2010 from 115,448 units a year back. Domestic 2-wheeler sales of TVS Motor witnessed a robust growth of 33% from 105,361 units in June 2009 to 139,905 units in June 2010. The company's 2-wheeler exports also posted an impressive growth of 66.4 per cent y-o-y to 16,780 units during the month.

Three-wheeler sales of TVSM at 3,003 units in June 2010, including exports, crossed the three thousand mark for the first time.

Honda Motorcycle & Scooter India (HMSI) stayed on course with its domestic sales of two-wheelers rising by 43.7% to 137,456 units and exports at 8,301 units growing by 9.7% during June 2010.

The auto market has been able to sustain the growth momentum with excellent sales performance during the first quarter. However, it will not be possible to sustain the high growth rate of 25-30% in the remainder of the year as the high base kicks in from July on. With inflation relentlessly sitting at very high levels beyond the comfort zone and the headline inflation likely to cross 11% on the back of increase in petroleum product prices, the RBI is likely to further increase the key policy rates resulting in the hike in the interest rates. However, as the economy continues to expand surpassing various forecasts, and macroeconomic fundamentals, barring worry on inflation front, remain strong, the auto market is likely to continue its good run in the coming months, albeit at moderate pace.