Festival Spirit Fails to Shake Up Two-Wheeler Market

Passenger Cars Maintain Steady Growth Riding on Sops and Freebies

The month of November saw somewhat improved retail sales piggybacking the festival season.

However, feverish pitch of festivity and increased spending in India normally associated with this festival season failed to stir the two-wheeler market out of its long slumber since the advent of the current financial year. Auto sales in India usually peak during October and November, as majority of the workforce gets bonus during this period.

Two-wheeler domestic sales dipped 2% y-o-y. No doubt, the sequential growth made an impressive reading, thanks to the excitement created by new models and festival spending, of course. Passenger car segment, including utility vehicles stayed on course, clocking a growth of 17% in the domestic sales. There was some cheer for the CV market largely due to continued good sales performance of LCVs and, in particular the sub-one-ton category vehicles. While domestic market for LCVs grew by 5.5%, overall CV sales growth stagnated at 0.4% y-o-y.

Car market leader Maruti Suzuki India Ltd achieved its highest-ever domestic sales of 65,216 vehicles in November 2007 compared to its sales tally of 52,574 vehicles in the domestic market in November 2006. The company's previous highest monthly domestic sales were 64,556 vehicles in March 2007. In all, Maruti Suzuki sold 69,699 vehicles in November 2007. This includes 4,483 units of exports.

During the month, India's largest selling car, Alto also recorded its highest ever domestic sales of 22,784 vehicles. The previous high for the Alto was 22,294 units in October 2006. Maruti's volume in the domestic A2 segment rose by 28.6 per cent and in A3 segment by 104.5 per cent during the month compared to sales in November 2006.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter, registered an impressive growth in the month of November 2007, recording an overall growth of 16.1 % over the same month last year. The launch of new compact car i10 across India propelled the domestic sales to rise by 15.4 %, while the exports grew by 17.3%. The total sales stood at 28,944 units in November 2007, of which the domestic market accounted for 19,052 units and exports - 9,892 units.

Riding on its initial euphoria, Hyundai's new compact car i10 recorded sales of over 10,000 units since its launch on 3151 October 2007. The initial numbers show that the i10 is on its way to becoming a long-distance runner. HMIL's segment-wise cumulative sales in the month of November 2007 are as follows: A 1 Segment - 25,443 units; A2 Segment - 3,455 units; A3 Segment - 1 unit; A4 Segment - 34 units; and SUV Segment - 11 units.

General Motors India (GMI) maintained its impressive growth by achieving a 110% increase in sales in November 2007 y-o-y. GM India sold 5,356 units during November 2007 as against 2,554 units in November last year. The November 2007 sales comprised of 1,703 units of the Chevrolet Tavera, 1,670 units of the Chevrolet Aveo, 557 units of the Chevrolet Optra and 1,426 units of the Chevrolet Spark.

 
Ford India witnessing sales of 2,512 units (including exports) in November 2007 as against 4,970 units a year ago, continued to be on a sticky wicket. The company's domestic sales at 2,162 units (3,010 units) dropped by 28%.

Mahindra & Mahindra held onto its numero uno position in the utility vehicle segment clocking domestic sales of 8,610 units as against 6,366 units recorded a year earlier. This translates into a growth of 35% y-o-y.

M&M's CV sales in domestic market during the month at 4,864 units grew by 6.5%, while those of Three-wheelers notching up 2,811 units rose by healthy 26.5% over November 2006. The Logan with sales count of 1,560 units during the month fell short of the expectation.

With high interest rate regime continuing to affect retails, Tata Motors Ltd (TML) reported a total sale of 46,947 vehicles (including exports) for the month of November 2007, a decline of 4% compared to 49,061 vehicles sold in November last year.

TML's Passenger Vehicle Business recorded total sales of 16,322 vehicles in the domestic market in November 2007, a decline of 16% compared to November 2006. The Indica registered sales of 10,488 nos., down 19.6%, while the Indigo family registered sales of 2,014 units., a decline of 29.5% y-o-y. November 2006 had been a high base month for car sales in view of the full supply impact post the restoration of the company's paint shop, which had got damaged in a fire in late September 2006. The Sumo and Safari accounted for sales of 3,820 units, a growth of 7% over November 2006 and the new Safari Dicor 2.2 VTT recorded a 55% growth with sales of 1,775 units.

The company's sales of Commercial Vehicles in November 2007 in the domestic market aggregated 26,895 units, a growth of 4% compared to 25,793 units sold in November last year. M&HCV sales stood at 14,426 units, - up 0.2% over November 2006, while LCV sales at 12,469 units witnessed a growth of 10%.

Tata Motors' exports adding up to 3,730 vehicles in November 2007 declined by 1,7% compared to 3,793 vehicles in November 2006.

Ashok Leyland was in the negative terrain. Its domestic CV sales aggregating 5,366 units in November 2007 vis-à-vis 6,420 units in November 2006 dropped by 16%.

Bajaj Auto failed to come out of the bad patch, recording 8% de-growth in domestic 2-wheeler sales during the month. The company sold 174,936 units of 2-wheelers compared to 192,182 units a year ago. Bajaj Auto's domestic 3-wheeler sales at 12,946 units during the month were also down 16%.

However, exports of two-wheelers at 34,940 units remained on a high-growth trajectory, clocking a robust growth of 58%.

Bajaj motorcycle retail, notably of the Bajaj XCD 125 DTS-Si and the Bajaj Platina, said the company's release, continues to be brisk even post festive season. However, billing has been constrained by the lower production arising out of plant closures during Diwali. As the capacity expansion for the Bajaj XCD 125 DTS-Si to 75,000 units per month gets completed in December 2007, the company expects motorcycles to show positive growth from December onwards.

Hero Honda, the world's largest two-wheeler manufacturer managed to stay on growth path with its domestic sales rising by 3.5% from 273,047 units a year ago to 281,991 units during November 2007. However, the company's exports totaling 5,924 units witnessed a fall of 17% during the month.

TVS Motor Company (TVSM) failed to break the long sluggish spell, its domestic sales of two-wheelers at 102,358 units (110,539 units) sliding by 7.4% y-o-y. However, the company's exports at 10,408 units were up 36.6%.

TVS is counting on the launch of the TVS Flame to strengthen its presence in the executive segment, which accounts for over fifty per cent of the motorcycle market and, thereby, move upward on the growth curve.

Honda Motorcycle & Scooter India (HMSI), another two-wheeler major clocking domestic sales tally of 69,659 units during the month had to be content with a modest growth of 3.7%. Scooters, which have been the mainstay of HMSI growth, recorded a de-growth of 4.7%. However, the company clokcing healthy growth in its exports at 2,428 units registered an overall growth of 6.3% in November 2007.

The subsequent marriage season in north India has sustained the increased pace of sales activity. In keeping with the past trends, the sales are going to taper off as the year draws to close. The good news is that the industrial production has recorded a healthy 11.8% growth in October. The surge in industry growth was once again led by the manufacturing sector. Whether the industrial production would sustain the high growth in the remainder of the year is not a certainty given the high base of November to March of the FY 2007. However, what is certain is that most two-wheeler and CV manufacturers are likely to miss their annual sales targets.