Auto Market in Deceleration Mode

Auto market is up against bumpy road. While the industry figures show a modest growth of 6.5% in domestic market during the month of June 2008, the slowdown in off take at the retail level has started to bite the dealerships across the country. A number of external and internal factors, such as, volatile international crude oil prices, credit squeeze & zooming interest rates and rising input costs & inflation in general adversely impacting the economy, many saw it coming. Therefore, the current downtrend in auto sales, though discomforting, is manifestation of the trouble that has been brewing for some time.

Maruti Suzuki India Ltd that controls roughly 50% of the Indian car market saw its domestic sales curve flattening. The company with domestic sales of 56,411 units during the month of June 2008 grew by measly 0.7% vis-à-vis the sales figure of 56,000 in June last year. However, its exports at 4,836 units helped the company to record an overall growth of 2.2% in June 2008 y-o-y.

Bucking the slowdown trend, Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter, turned in an impressive performance in the month of June 2008. HMIL ended up recording an overall growth of 45.3% during June 2008 over the same month last year. Thanks to the global success of the i10, the company's exports zoomed by 61.7%, while the domestic sales grew by 34% year-on-year.

The total sales of HMIL during the month stood at 40,182 units, of which the domestic market accounted for 21,881 units compared to 16,335 units in June 2007. The exports aggregated 18,301 units in June 2008 as against 11,318 units a year ago.

Commenting on the June, 2008 sales performance, Arvind Saxena, Sr Vice President - Marketing and Sales, HMIL said, "At a time when the industry is already under tremendous pressure because of the higher interest rates, the rise in fuel costs and the rising inflation, it is indeed very heartening to see that Hyundai products continue to be an affordable and attractive buy for most car buyers. We are positive that we will be able to keep the momentum going in the coming months."

Segment-wise cumulative sales of HMIL in the month of June, 2008 are as follows: A2 Segment (Santro, i10 & Getz) - 33,859 units; A3 Segment (Accent & Verna) - 6,272 units; A5 Segment (Sonata Embera) - 47 units; and SUV Segment (Tucson) - 4 units.

 
General Motors India (GMI) that has been witnessing an upswing in the recent past ran out of the gas to register a negative growth of 1.9%. GMI sold 4,687 units in June 2008 compared to 4,779 units in June 2007.

Ford India which had been losing ground over the past one year bounced back to clock sales of 3,360 units in domestic market aided by the launch of new Fiesta. This translates into a growth of 22.2% over the corresponding previous sales tally of 2,750 units.

Tata Motors Ltd reported a total sale of 47,245 vehicles (including exports) for the month of June 2008, a growth of 7% compared to 44,317 vehicles sold in June last year. Cumulative sales for the company at 131,733 units during the current financial year (Apr-Jun'08) have grown by 3% over the corresponding period last year.

Passenger Vehicle Business Unit of Tata Motors posted aggregate sales of 17,017 vehicles in the domestic market during June 2008, a marginal decline of 2% vis-à-vis 17,418 vehicles sold in June 2007. The Indica sales at 8,560 units plummeted by 27%. According to the company, the Indica, being in its mature phase, continues to see a significant portion of its volumes migrate to the attractively priced Indigo CS sedan. The Indigo family recorded sales of 4,747 units, a strong 102% growth over June 2007. The Sumo and Safari sales accounted for 3,710 units, clocking a growth of 11% y-o-y. While Sumo sales at 2,196 units grew by 9%, Safari sales adding up to 1,514 units were up 15%.

TML's sales of commercial vehicles in June 2008 in the domestic market stood at 26,797 units, up 25% over 21,417 vehicles sold in June last year. M&HCV logged 12,845 units of sale notching up a growth of 9%, while LCV sales totalling 13,952 units posted a healthy growth of 45% over June 2007 sales tally.

The company's exports at 3,431 vehicles in June 2008 declined by 37% compared to the export figure of 5,482 vehicles in June 2007.

Mahindra & Mahindra stayed on course, albeit at a slower pace, to clock 7,987 units of domestic sales of its utility vehicles during June 2008, which represents a growth of 5.9% over sales figure of 7,539 units recorded a year ago. The company's commercial vehicle sales rose by 9.9% and 3-wheeler sales by a whopping 55.5% in domestic market during the month.

Ashok Leyland also put up a good show in its sales performance. The company clocked total sales (domestic + exports) of 7,144 units in June 2008 compared to 6,514 units in June last year, witnessing a growth of 9.7%. The company notched up a 10.6% growth y-o-y in domestic market, logging 6,435 units. Exports totalled 709 units (698 units) to register 2.2% growth.

Two-wheeler market managed to record a growth of 6.5% in the month of June 2008, thanks largely to the robust performance of Hero Honda Motors Ltd. All other two-wheeler manufacturers reported either flat or negative growth.

Hero Honda Motors Ltd with a domestic sales at 287,868 units left its competitors far behind in the race. The company clocked at robust growth of 16.5% over June 2007 sales tally of 247,037 units in the domestic market. HHML's exports at 7,807 units fell by 4.4%. Overall, Hero Honda posted a 16% rise in its sales.

TVS Motor Company saw its domestic two-wheeler sales at 92,776 units dropping by 5.3% during the month of June 2008 from the corresponding sales figure of 98,001 units in June 2007. However, the company's healthy exports adding up to 15,010 units grew by massive 64.3% to help it finish with a paltry 0.6% growth during the month.

Bajaj Auto also found itself on a sticky wicket in domestic market. The company recorded a 3.6% dip in its domestic two-wheeler sales at 121,143 units in June 2008 from 125,779 units a year ago. However, its exports of two-wheelers continued to surge without any hiccups and witnessed buoyant 41.7% rise to reach 55,916 units in June 2008. Aided by the robust exports, Bajaj Auto ended up on a 7.2% growth in its cumulative two-wheeler sales during the month.

With macroeconomic fundamentals showing signs of weakening and odds heavily stacked up against it, auto market is headed for a sluggish spell. Hope, the current slowdown is a blip and the market will regain momentum soon.