Price Hike Fear Kindles the Momentum of Auto Sales

Auto sales continued their robust momentum in February and touched record highs on the back of positive consumer sentiment and partially due to early buying at the dealers' desk in anticipation of rollback of excise duty in the Union Budget.

Volumes of most companies showed no signs of tapering off and recorded healthy growth for the month. The commercial vehicle (CV) segment led the charge, with the Medium & Heavy Commercial Vehicle (M&HCV) segment, aided by the low base of the last year, growing at a scorching pace in tandem with the overall pick-up in economic and industrial activities as the key macroeconomic indicators suggest.

The passenger vehicle (PV) segment also continued on high growth trajectory, riding on new launches and improving economic environment & consumer confidence. PVs touched a new high of 194,548 units of domestic sales in a single month. The previous record figure of 187,605 units in PVs domestic sales was achieved only in Jan'10.

In keeping with the buoyant market trends, two-wheelers and three-wheelers, too, maintained their growth momentum. Two-wheeler sales including exports aggregating 942,048 units rose by a healthy 34% during the month, while 3-wheeler sales volume of 59,400 units witnessed a robust 50.6% growth y-o-y. Overall industry volume comprising of 1,295,024 units was up 36.7% in Feb'10 in comparison to 947,269 units in the same month last year.

Car market leader Maruti Suzuki India Ltd sold a total of 96,650 vehicles in Feb'10 against 79,190 vehicles in Feb'09, a growth of 22%. This includes 11,885 units of exports, which grew by 38.8%. The company's domestic sales totalling 84,765 units were up 20 per cent y-o-y.

Hyundai Motor India Ltd, the country's second largest car manufacturer and the largest passenger car exporter touched a new high with record sales of 31,001 units in the domestic market in Feb'10, registering 46.1 % growth y-o-y.

HMIL's total sales (domestic + exports) during Feb'10 stood at 54,617 units as against 38,254 units in Feb'09, clocking a 42.8% growth. The company's exports sustained their momentum rising by 38.8% from 17,020 units in Feb'09 to 23,616 units in February 2010.

Commenting on HMIL's sales performance Arvind Saxena, Director - Marketing and Sales, HMIL commented, "The sales continue on a strong pitch as we have seen a lot of pre-ponement of buying because of the anticipated rise in excise duty in the Union Budget during the last two months. The 2% hike in excise duty which was subsequently levied might result a correction in demand in the short run."

The segment-wise sales (domestic + exports) of HMIL for the month of Feb'10 are as follows: A2 Segment (Santro, i10, Getz & i20) - 50,515 units; A3 Segment (Accent & Verna) - 4,051 units; A5 Segment (Sonata Transform) - 50 units; and SUV Segment (Tucson) - 1 unit.

 
Honda Siel Cars India (HSCI) sold 6,275 units in the domestic market during the month of Feb'10, up 12.5% over 5,579 units sold a year ago. Cumulatively, for the period Apr'09-Feb'10, HSCI's sales tally stood at 55,884 units, rising by 24% over 45,052 units during the corresponding period of 2008-09.

Model-wise sales break-up of Honda Siel Cars for the month of Feb'10 is: Jazz - 233 units; City - 5,076 units; Civic - 538 units; Accord - 299 units; and CR-V - 129 units.

Riding high on the initial encouraging response for its latest offering 'Beat', General Motors India (GMI) witnessed a record growth of 126% in Feb'10, selling 11,111 units as against 4,921 units in Feb'09. Incidentally, it was an all time high in monthly sales for GMI since its Indian debut in 1996. 'Beat' replaced 'Spark' as the company's best-selling model during the month.

The Feb'10 sales of GMI comprised of 4,431 units of Chevrolet Beat, 3,412 units of Chevrolet Spark, 1,592 units of Chevrolet Tavera, 726 units of Chevrolet Cruze, 420 units of Aveo, 411 units of Aveo U-VA, 98 units of Chevrolet Optra and 21 units of Chevrolet Captiva.

Tata Motors total sales (including exports) of commercial and passenger vehicles in Feb'10 stacked up to 69,427 vehicles, a growth of 58% over 43,811 vehicles sold in Feb'09. The company's domestic sales of commercial and passenger vehicles during the month also soared by 56% to 66,190 units from 42,493 units sold a year earlier.

Tata Motors' domestic sales of commercial vehicles in Feb'10 aggregated 39,077 units, a 68% growth compared to 23,232 vehicles sold in Feb'09. While LCV sales at 16,816 units surged by 45%, M&HCV sales volume of 17,441 units recorded a whopping growth of 98% y-o-y during the month.

Passenger Vehicles Business Unit of Tata Motors reported a total sale 26,985 units in the domestic market in Feb'10, the highest ever and a 42% increase compared to 19,039 units in February last year. Sales of the Tata Nano were 4,105 units. The Indica range sales at 11,502 units were the highest this fiscal. The Indigo range recorded sales of 7,373 units, the highest ever since the Indigo's launch in 2002 and a growth of 75.2% over February last year. The Sumo/Safari range accounted for sales of 4,005 units, the highest this fiscal and a growth of 14% y-o-y. The Sumo family individually recorded the highest sales this fiscal.

The company's exports at 3,237 vehicles in Feb'10 registered a growth of 146% compared to the export figure of 1,318 vehicles in February last year.

UV major Mahindra & Mahindra stayed on a fast track notching up total domestic sales of 26,043 units in Feb'10 vis-à-vis 18,586 units in Feb'09, a robust 40.1 % increase. While UV sales at 12,801 units in domestic market were up 24.7%, CVs and 3-wheelers also witnessed healthy y-o-y growth of 95.7% and 40.1%, respectively during the month. The company's exports also rose sharply by 338% to 1,314 units in Feb'10.

The buoyancy in CV sales also found reflection in Ashok Leyland's sales performance during the month. The company's domestic sales at 7,092 units were up 166% and the exports at 777 vehicles rose by 35%.

Two-wheelers sustained their excellent run with Hero Honda Motors Ltd (HHML), the world's largest two-wheeler manufacturer, clocking a sales growth of 16% at 382,096 units in Feb'10 against 329,055 units in Feb'09. The company's domestic sales at 372,387 units during the month grew by 15.5% and exports at 9,709 units by 47.8% over Feb'09.

Powered by its 'bigger and sportier' Pulsar and Discover brands, Bajaj Auto Ltd continued its good showing. The company's two-wheeler domestic sales figure in Feb'10 read 175,812 units - up 93.5% from 90,873 units a year ago. And, the two-wheeler exports at 58,898 units stayed on course, growing by a hefty 41.9%. Bajaj maintained its robust performance in domestic 3-wheeler sales during the month, which increased by a handsome 25.1 % to 15,224 units from 12,171 units a year earlier.

Basking in the buoyant auto market, other two-wheeler majors too posted a high two-digit growth.

TVS Motor Company posted a 33.8% growth in its domestic sales of two-wheelers, which increased to 121,403 units during Feb'10 from 90,718 units a year ago. The company's two-wheeler exports at 19,141 units were also on course, clocking a decent 15.4% rise y-o-y.

India Yamaha Motor Pvt Ltd that had witnessed a blip in its sales during the last two months, came back in the positive territory during the month of Feb'10. Yamaha motorcycle sales at 25,766 units (including exports) in Feb'10 were up 48% from 17,407 units in February last year. While the domestic sales increased to 16,313 units in Feb'10 from 13,848 units a year ago, the exports increased to 9,453 units from 3,559 units in February last year.

Continuing its northward movement, Honda Motorcycle & Scooter India (HMSI) clocked a total sales growth of 22.2% in Feb'10. The company sold 115,154 two-wheelers in the domestic market, witnessing a growth of 21.5%. The exports also rose by 34.8% y-o-y to 7,134 units in Feb'10.

The buoyant sales in Feb'10 were fuelled partially by the anticipated rollback of stimulus in the Budget 2010. With the Budget exercise over and vehicle ownership cost going up due to increase in excise duty on vehicles and auto fuel prices, the vehicle sales are likely to moderate in the coming months especially as the input costs will go up further with the introduction of new emission norms from Apr'10.

Food inflation and WPI continue to hover at high level beyond the comfort zone, which may prompt the RBI to tighten monetary policy leading to increase in interest rates. However, as the economy and industrial output continue to grow steadily deepening the recovery further, the auto market is expected to be buoyant going forward especially with a significant relief in personal income tax in the recent Budget.