Clutching at Straws

After a decent performance in April 2008, Auto market seems to be slipping back into inertia. Continuing the trends of recent past, while passenger vehicles stayed on course to record a healthy growth of 16.6% during the month of May 2008, commercial vehicles and two-wheelers had to be content with a single digit growth of 6.1 % and 7%, respectively in the domestic market. Three-wheelers segment remained in negative terrain with a fall of 2.5% in its domestic sales. Even exports, which had somewhat softened the impact of slowdown in 3-wheeler segment during the year 2007-08, are slowing down beginning from the current financial year. While 3-wheeler exports slipped by 10.3%, other segments maintained their growth momentum on export front.

Car market leader Maruti Suzuki India Ltd sold 69,001 vehicles in May 2008, including exports of 4,858 vehicles. This translates into a growth of 16.2% over 59,400 vehicles sold by the company in May 2007. Maruti Suzuki's domestic sales tally of 64,143 vehicles reflected a rise of 14.6% vis-à-vis 55,952 vehicles sold in the domestic market a year ago.

Maruti's volume in the A3 segment grew by 18.7 per cent, while the A2 segment posted a growth of 14.5 per cent during the month. The A1 segment grew by 25.2 per cent. This is on account of early despatches of Maruti 800 Duo (LPG variant), which is due for launch in early June 2008. The month of May 2008 saw Swift complete three years of its launch. It also recorded its highest ever sales, clocking 10,408 units in May 2008. Swift sedan - Dzire also continued to log impressive sales numbers. The WagonR too kept pace scoring its highest ever sales at 14,923 units during May 2008.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter, posted a whopping 51.1 % growth in cumulative sales (domestic + exports) for the month of May 2008.

HMIL's total sales during the month stood at 40,261 units. While the domestic market accounted for 24,510 units, exports clocked 15,751 units in May 2008. In comparison, May last year had fetched cumulative sales of 26,648 units for the company, comprising domestic sales at 16,643 units and exports of 10,005 units. This translates into a growth of 47.3% in the domestic market and 57.4% increase in overseas sales.

Commenting on HMIL's May 2008 performance, Arvind Saxena, Sr Vice President, Marketing & Sales said, "In spite of slowdown in the industry due to higher interest rates, HMIL has been able to emerge with very strong figures primarily because of a very dominant presence in the compact segment where both our offerings Santro and the i10 are becoming the segment leaders. The i10 has done phenomenally well, having sold around 50,000 units in the first 5 months of the CY 2008."

HMIL also came up with an improved performance in the mid-size segment that recorded a growth of 17% in May 2008 with sales during the month standing at 3,209 units compared to 2,739 units in May 2007. HMIL's sequential growth rate in the mid-size segment has been 20%+ over the April 2008 sales figure of 2,668 units.

 
The company's segment-wise cumulative sales in the month of May, 2008 were: A2 Segment (Santro, i10 & Getz) - 34,328 units; A3 Segment (Accent & Verna): - 5,874 units; A4 Segment (Elantra) - 14 units, A5 Segment (Sonata Embera) - 41uriits; and SUV Segment (Tucson) - 4 units.

General Motors India posted a growth of 7% clocking sales of 5,789 units in May 2008 as against 5,432 units in May last year. The May 2008 sales comprised of 1,667 units of Chevrolet Tavera, 1,214 units of Chevrolet Aveo, 383 units of Chevrolet Optra, 2,250 units of Chevrolet Spark and 275 units of Chevrolet Captiva.

"The industry has seen some growth primarily driven by new models; however the overall market sentiment remains sluggish. The market is also worried because of the steady increase in inflation which has lead to a sudden surge in input costs for all manufacturers" said P Balendran, Vice President, GM India. "The increasing fuel prices, rising interest rates and threat of the global recessionary trends are affecting the growth of the sector," added Balendran.

GM India's network expansion drive for service centres is going full steam and 117 locations across India have now been covered with state-of-the-art and quick-response service points. By the end of this year, GM India intends to extend its reach with a total of 125 sales points and 135 service outlets across the country.

Mahindra & Mahindra maintained its growth tempo in utility vehicle sales. The company's domestic utility vehicle sales at 9,319 units in May 2008 rose 12.5% over 8,283 units in May 2007. However, Logan sales at 1,531 units in May 2008 were down by massive 45% from 2,787 units of sale recorded a year earlier.

Mahindra's performance in commercial vehicle and 3-wheeler segments during May 2008 was robust, their domestic sales growing by 27.7% and 46.2% respectively.

Tata Motors reported a total sale of 46,339 vehicles (including exports) for the month of May 2008, a growth of 9% compared to 42,558 vehicles sold in May last year.

Passenger Vehicle Business Division of Tata Motors clocked total sales of 19,234 vehicles in the domestic market in May 2008, a growth of 9% over 17,580 vehicles sold in May 2007. The Indica recorded sales of 9686 units, a decline of 19% vis-à-vis May 2007. The Indica LPG was launched during the month and has reportedly received a good response. The Indigo family notched up sales of 4542 units, posting a strong 105% growth over May 2007 on the back of good demand for the recently launched Indigo CS. The Sumo and Safari accounted for sales of 5,006 units, zooming by 49% over the May 2007 sales figure. While Sumo recorded a 70% growth y-o-y with sales tally of 3,226 units, Safari sales at 1780 units grew by 21 %.

TML's sales of commercial vehicles in May 2008 in the domestic market added up to 23,682 units, a growth of 15% compared to 20,1 ;75 vehicles sold in May last year. M&HCV sales stood at 11,742 units, up 12% over May 2007, while LCV sales at 11,940 units rose by 17%.

The company's exports at 3,423 vehicles in May 2008 declined by 20% compared to 4,303 vehicles exported in May 2007.

Rival, Ashok Leyland witnessed cumulative sales of 5,576 vehicles in May 2008, down 3.9% from 5,804 vehicles sold a year ago. While the company's domestic sales at 5,161 vehicles slid 5%, expo is were up 13% y-o-y.

Two-Wheeler domestic sales growth of 7% during the month was propelled largely by Hero Honda and HMSI.

Market leader and world # 1 two-wheeler manufacturer, Hero Honda Motors Ltd with a domestic sales figure of 306,809 two-wheelers left other competitors behind by a distance. The company's domestic sales grew by 10.5% over 277,668 two-wheelers sold in May 2007. However, its exports at 5,508 units witnessed a sharp fall of 25% y-o-y.

Honda Motorcycle & Scooter India (HMSI) posted a growth of 9% at 82,924 units of sale in domestic market. Like its sibling Hero Honda, HMSI also saw its exports aggregating 3,159 units dropping by 15.5% from the export figure of 3,737 units recorded in May last year.

Other two-wheeler majors Bajaj Auto and TVS Motor witnessed a flat curve of their domestic sales during the month.

Bajaj Auto's domestic two-wheeler sales in May 2008 standing at 131,094 units were down by a tad 0.7%. However, the company remained on track in its export performance by clocking 49,841 units of exports, which represented a healthy growth of 33.7%. Overall, Bajaj finished with a 7% growth y-o-y in May 2008.

Similarly, TVS Motor's two-wheeler sales in domestic market at 98,699 units in May 2008 were virtually flat compared to sales tally of 98,307 units in May 2007. However, helped by a whopping 43% growth in its exports, TVS ended up with a cumulative growth of 4.3%, with its cumulative sales tally leading 112,770 units in May 2008 as against corresponding figure of 108,156 units in May last year.

With inflation and interest rates ruling high, fuel prices volatile and banks tightening lending norms, the market sentiment is at its low ebb. The road ahead is hazy and fraught with uncertainty.