Shifting Gears

Auto industry has been on a double-digit growth track for past few months and across segments with the revival of demand in domestic market. The advent of New Year brought good news for almost all automakers with industry posting record sales in January 2010 building on the good performance of the last 4-5 months. Total industry sales (domestic + export) in January 2010 zoomed to 1,264,937 units as against 872,194 units in the corresponding month of 2009, rising by a healthy 45%.

The robust growth was boosted by the buzz created by new models & variants, easy availability of retail finance & soft interest rates, improving economic environment & stabilizing job market, arid likely price increase arising out of the anticipated rollback of fiscal package in the forthcoming budget and introduction of tighter emission norms with effect from 1st April 2010.

Capacity expansion plans shelved earlier due to global meltdown are back on agenda of the boards. IIP numbers for December 2009 released by CSO came as an icing on the cake, as India's industrial growth recorded the highest growth of 16.8% on back of record manufacturing growth in last 15 years. The increased pace of industrial & economic activity found its reflection in the commercial vehicles sales in January 2010, which soared by 131.2% to 57,623 units in the domestic market over 24,924 units in January 2009. CV exports also grew by 136% to 4,176 units in January 2010 from 1,770 units a year ago. The hefty growth numbers for CVs may be somewhat illusory, though, due to the very low base of the last year when the CV sales were the worst affected post global financial crisis.

Passenger vehicle sales stayed on course, so did two and three-wheeler sales. Continuing their excellent run, cars, utility vehicles MPVs taken together posted a growth of 36.6% in January 2010 with domestic sales of 187,605 units viz-a-viz 137,380 units in the corresponding month last year. The month also saw the PV exports at 226,221 units rising by whopping 78.7%

Similarly, the two-wheelers and three-wheelers were also on a high growth trajectory, clocking healthy growth of 43.4% and 46.5%, respectively, in the domestic market. The performance of two-wheelers and three-wheelers were also impressive on export front. While two-wheeler exports surged by 28.2%, three-wheeler overseas sales grew by 78.3%, thanks to Bajaj Auto that continued to contribute major chunk to the export figures of 2 & 3-wheelers.

Car market leader Maruti Suzuki India Ltd (MSIL) continued to march along steadily with total sales of 95,649 units, including 14,562 units of exports, during January 2010. This reflects a growth of 33.3% compared to the corresponding sales tally of 71,779 units a year ago. This is the highest ever domestic as well as total sales for the company. The domestic sales at 81,087 units were up by 21% while exports at 14,562 units were up by whopping 205% over the same month in 2009.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and exporter began the year on a positive note as both domestic and overseas sales recorded healthy growth. While domestic sales at 29,601 units during January 2010 clocked a growth of 40.8%, exports increased by 42.2% from 16,200 units in January 2009 to 23,034 units in January 2010. The company's total sales for January 2010 stood at 52,635 units - up 41.4%. Incidentally, the domestic sales growth was the highest since 1998 when HMIL launched the Santro.

 
HMIL's segment-wise cumulative sales for the month of January 2010 were as follows: A2 Segment (Santro, i10, Getz & i20) - 47,104 units; A3 Segment (Accent & Verna) - 5,502 units; and A5 Segment (Sonata Transform) - 29 units.

Commenting on HMIL's performance Arvind Saxena, Director - Mktg and Sales, HMIL noted, "We have started the year on a right note and we hope the momentum will continue with the help of the stimulus package offered by the government."

Riding high on the good numbers notched up by Spark and recently launched Beat, General Motors India (GMI) registered a record sales growth of 141 % during the month, selling 9,421 units in January 2010 against 3,907 units in January 2009. For General Motors India as well, this is the highest-ever monthly sales figure since its inception. The January 2010 sales comprised of 3,477 units of Chevrolet Spark, 2,825 units of Chevrolet Beat, 1,512 units of Chevrolet Tavera, 686 units of Chevrolet Cruze, 434 units of Aveo U-VA, 364 units of Aveo, 72 units of Chevrolet Captiva and 51 units of Chevrolet Optra.

Tata Motors' sales (including exports) of commercial and passenger vehicles in January 2010 stood at 64,993 units, a growth of 78.8% y-o-y. The domestic sales volumes of Tata commercial and passenger vehicles aggregating 61,622 units during the month grew by 75.5%.

Tata Commercial Vehicles clocked sales of 35,198 units in the domestic market, an impressive 112.6% growth compared to 16,559 units in January 2009. CV exports at 2,807 units rose by 212.2% over 899 units a year ago. Domestic sales & exports of Tata commercial vehicles added up to 38,005 units, a growth of 117.7%.

Passenger Vehicles Business Unit of Tata Motors reported total sales of 26,988 units, including 564 units of exports in January 2010, which translates into a growth of 42.8% y-o-y. The Indica range sales were 11,448 units, the highest this fiscal though flat over January last year. The Indigo range recorded sales of 7,258 units, the highest ever since the Indigo's launch in 2002 and a growth of 83% over January 2009. The Sumo/Safari range accounted for sales of 3,538 units, the highest this fiscal and up 21 % y-o-y.

Mahindra & Mahindra Ltd (M&M) continued to drive in a fast lane. M&M's sales, including exports, of all categories of vehicles in January 2010 totalled 26,499 units, a 109.2% increase over the sales figure of 12,665 units recorded during the same month a year earlier. Mahindra's UV sales in domestic market at 11,872 units sustained the momentum, recording a robust 119.2% y-o-y growth. Mahindra 3-Wheeler and CV sales in domestic market at 4,516 units and 8,966 units were also on course notching up growth of whopping 60% and 116%, respectively.

Ashok Leyland Ltd (ALL) held steady with its total sales at 7,871 units (including exports of 411 units) in January 2010 rising steeply by 222.1 % in keeping with the buoyancy in CV market witnessed for the last 4-5 months.

Consistent with the pattern, two-wheeler majors also witnessed buoyant sales during the month. Hero Honda Motors Ltd (HHML), the world's largest two-wheeler manufacturer, saw a 23.6% jump in its domestic sales at 384,517 units in January 2010. This was a remarkable performance considering that the healthy growth came over high base of 311,030 units a year ago. HHML also witnessed its exports growing by 19.4% to 5,285 units during the month.

Bajaj Auto Ltd that has shown resilience and come back in the positive territory with a vengeance saw its 2-wheeler domestic sales during the month vrooming by a massive 168.9% to 179,322 units vis-à-vis 66,696 units in January 2009. The company's exports of two-wheelers continued their decent run with a growth of 23% at 53,727 units during January 2010. Bajaj Auto also came up with an impressive show in 3-wheeler segment. Bajaj 3-wheeler domestic sales volume of 15,001 units in January 2010 grew by a healthy 29%, while 3-wheeler exports at 17,968 units were up 73.4% y-o-y.

With robust sales and healthy contributions from all segments of the two-wheeler market, TVS Motor Company posted a significant 34% growth in two-wheeler sales at 125,578 units during the month of January 2010. Domestic sales of TVS two-wheelers witnessed a quantum 37% increase to 109,504 units in January 2010 as against 79,729 units in January 2009. Continuing its upward trend, exports recorded a growth of 15% with overseas sales of 16,074 two wheelers in January 2010 as against 14,000 units in the corresponding month of the year 2009.

TVSM witnessed a healthy growth in its 3-wheeler business as well, with sales at 1,717 units in January 201 0 increasing by 268.5% y-o-y.

Honda Motorcycle & Scooter India (HMSI) gradually closing in on TVS Motor as the 3rd largest two-wheeler player in the Indian market, posted a 24.8% growth in its total sales at 118,498 units in January 2010 compared to 94,937 units in January 2009. HMSI's motorcycle sales rose 19.2% to 47,795 units, while scooter sales increased by 29% to 70,703 units in January 2010.

The impressive industrial growth during October to December 2009, sharp rise in business confidence index to a two-year high, a 14% growth in exports, manufacturing and service sectors once again on a manpower hiring spree with the improvement in economic environment & consumer demand, and easy finance availability are positive indicators that the auto market is likely to stay on a high growth trajectory. Inflation and fiscal situation are the causes of worry though. The Union Budget 2010, therefore, assumes added significance and is keenly awaited.