Festive Season Fails to Cheer Auto Market

Auto market counting heavily on the festive season for stemming the slowdown did not see much excitement in October 2011 with a number of festivals during the month failing to set the sales chart on fire. The festivals were without fervour. Even the great festivals of Dhanteras and Diwali when the people are on a spending spree, did not light up the auto market. Frequent fuel price hikes and rising vehicle loans continued to be the villain of the piece, dampening the sentiment and sales of passenger cars for the fourth consecutive month in Asia's third-largest auto market.

The cause of worry is that the downbeat sentiment that had been the party spoiler for passenger vehicles has begun to pervade other segments too. Commercial vehicles and 2-Wheelers had been holding out in spite of the slowdown in economy in general. However, the month of October saw all segments recording unflattering sales figures.

The domestic vehicle sales across all categories registered a decline of 1.05% to 14,41,594 units in October 2011 from 14,56,901 units in the same month previous year.

Passenger vehicles took a major hit in October 2011 as the segment registered a decline of 20.25 per cent to 183,142 units from 229,647 units in the year ago period. The sales were also impacted by labour unrest at Maruti Suzuki India Ltd, which controls nearly half of the local market. However, exports of passenger vehicles were up by a decent 10% y-o-y.

Two-wheelers in October 2011 posted a marginal increase of 2 per cent to 11,47,621 units in domestic sales, compared to 11,25,052 units a year earlier. 2-wheeler exports, nonetheless, kept the momentum, recording 16% growth y-o-y.

Commercial vehicle segment, witnessed a steady growth of 19%, posting domestic sales of 61,800 units during October 2011. The healthy growth in commercial vehicle sales was driven by LCVs that witnessed a decent 23% growth y-o-y in domestic sales at 27,024 units. However, the slowdown in CV segment was also palpable inasmuch as the growth was, to a large extent, aided by the inventory build-up at dealerships. The retail sales of commercial vehicles in October 2011, as reported by dealerships, were not something to rave about.

Domestic sales of three-wheelers were down by 3% at 49,031 units in October 2011. As in the case of passenger vehicles and 2-wheelers, exports of 3-wheelers were in fast lane, with robust growth of 23% at 29,33 units imparting some respectability to the final sales figure.

Maruti Suzuki India Ltd (MSIL)'s sales in October 2011 plunged 53% to 55,595 units from 118,908 units a year earlier. The domestic sales of the company logged 51,458 units, registering a negative growth of 52.2% y-o-y during the month. The company's exports remained in negative terrain to record a 64% y-o-y decline at 4,137 units in October 2011. The labour unrest at Manesar plant was also responsible for the sharp downturn in the company's sales numbers. The unrest adversely impacted the production and sales numbers to the tune of 40,000 units (Gurgaon and Manesar) in the month.

Hyundai Motor India Ltd (HMIL), the second largest player in car market, witnessed a 5% decline in its domestic sales to 33,001 units in October 2011 from 34,720 units in the corresponding month last year. The company's exports were also down by 12.4% to 17,500 units during the month.

The segment-wise cumulative sales of HMIL for October 2011 are: A2 segment (Eon, Santro, MO, and i20) -41,204 units; A3 Segment (Accent and Verna) - 6,929 units; A5 segment (Sonata Transform) - 2 units; and Santa Fe (SUV) -190 units.

 
Commenting on October 2011 sales, Arvind Saxena, Director - Marketing and Sales, HMIL said, "We have seen that sales get a boost in the festival season but this year sentiment has been tepid. We don't expect a major upswing in the near future, as the challenging economic environment is affecting industry. The Eon has been received well, we have got more than 9,000 bookings till date."

Ford India too witnessed a 10.4% drop in its domestic sales from 9,026 units in October 2010 to 8,091 units during October 2011. As in the previous months, the company's exports continued to soar, registering a staggering 296% increase y-o-y at 2,815 units during the month.

"Exports are a strong part of our growth strategy. And it's wonderful to see the Chennai-made Figo winning hearts of customers in overseas markets too," Michael Boneham, President & MD, Ford India, said.

Toyota Kirloskar Motor (TKM) maintained its steady upward movement with a whopping 63% growth during the month of October 2011. The company sold 10,762 units in October 2011 as compared to 6,602 units in October 2010. Toyota's latest offerings - Etios and Etios Liva, which sold 3,405 and 2,454 units, respectively, accelerated the growth.

"The production in October has been low due to the festive holidays. However, we have registered a growth in sales. The Etios continues to drive the sales growth," said, Sandeep Singh, Deputy MD, Marketing, TKM.

Tata Motors held on, with its total sales (including exports) of vehicles in October 2011 rising by 5% y-o-y to 68,009 units during October 2011.

Passenger Vehicle Business Unit of Tata Motors witnessed domestic sales of 25,124 units in October 2011, up marginally by 3%. Sales of the Tata Nano were 3,868 units, higher by 26% over the corresponding figure last year. The Indica range sales at 10,812 units were higher by 11 %, while Indigo range sales plunged by 24% y-o-y to 6,268 units. The Sumo/ Safari / Aria / Venture range recorded a 23% uptick in domestic sales at 4,176 units during the month of October 2011.

Tata Commercial Vehicles clocked 38,714 units in domestic sales, a 13% growth compared to 34,328 units sold in October last year. LCV sales grew by 6% to 21,892 units, while M&HCV sales grew by 23% y-o-y to 16,822 units.

The second biggest CV maker, Ashok Leyland (ALL), returned to the growth path with the launch of DOST. The company posted a growth of 23% in its domestic sales at 5,682 units in October 2011 compared with 4,628 units in October 2010. The company's exports fell sharply by 48% to 570 units during the month.

Mahindra & Mahindra (M&M) registered domestic sales of 39,352 units during October 2011, as against 32,491 units during October 2010, representing a growth of 21 %. M&M's Passenger Vehicles (which includes the UVs and Verito) were up 10.4%, with their sales tally reading 18,756 units in October 2011 as against 16,987 units during October 2010.

Speaking on the numbers, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra said, "We are delighted with a 20% growth in October in spite of the planned maintenance shutdown, which we undertook during this month. The XUV500 has received a phenomenal response with 8,000 plus bookings in just 10 days and we are currently in the process of expediting deliveries before re-opening bookings."

Volkswagen India Pvt Ltd continued from where it had left off in the previous month, selling 7,266 units during October 2011, which translated into a healthy 67.3% growth year-on-year.

Honda Siel Cars India (HSCI) clocked 5,526 units of sale in the month of October 2011 as against 5,275 units during the corresponding month last year, growing by 4.8%. Model wise break-up of HSCI sales during the month of October 2011 was: Brio - 1,220 units; Jazz -463 units; City - 3,376 units, Civic - 281 units; Accord -172 units; and CR-V - 14 units.

Two-Wheelers, growing at a scorching pace thus far, encountered a speed breaker for the first time in this financial year.

Hero MotoCorp Ltd that has been a pace setter slowed down to clock a paltry 1.2% increase y-o-y in its domestic sales, which added up to 497,015 units during October 2011.

Bajaj Auto Ltd was also in slow lane with its domestic sales growing by just 2% y-o-y to 244,503 units in October 2011. Exports of Bajaj two-wheelers, however, retained their buoyancy, growing robustly by 19% to 106,580 units during the month.

Domestic sales of TVS two-wheelers slid by 8% to 159,887 units in October 2011 from 173,771 units in the corresponding month last year. The company's two-wheeler exports were on course to record a 12% growth y-o-y to 20,119 units.

While stubborn inflation, volatile petrol prices and soaring lending rates have been the bugbear of auto market, other macroeconomic pointers are not enthusing either. Industrial production recorded a 1.9% growth during September 2011, which is a 20-month low. The growth rate for merchandise exports is also moderating. Quite a few experts had reckoned the robust exports growth figures trotted out in the earlier months as baffling, not in tune with the ground reality, though. All in all, the scenario is not cheering for the auto market. The slowdown looming large on the horizon is here to stay for some time.