Slowdown Hits Car Sales

Slowdown has begun to bite car market acutely as borne out by the sales figures for the month of July. The stinging effect of inflation and rising interest rates is clearly reflected in the none-too-flattering domestic sales of three auto majors, namely Maruti Suzuki, Hyundai Motor India and Tata Motors, which together account for about 80% of the domestic market. Passenger vehicles were down by 1.4% in July 2008 - a situation not witnessed for long. Commercial vehicle sales, a barometer of industrial & economic activity grew by a paltry 2%, due largely to the continuing good performance of sub-one tonne category. While 3-wheelers staged a recovery of sort with a positive growth of 1.5% after being in the negative terrain for quite some time, a healthy 19.5% growth in domestic sales of two-wheelers in July 2008 bucked the trend, thanks to the spectacular performance of Hero Honda. Healthy two-wheeler sales numbers ensured a handsome 14.2% growth for domestic auto market.

Car market leader Maruti Suzuki India Limited's domestic sales at 52,911 units in July 2008 were flat compared to 52,839 units clocked in the corresponding month last year. Exports of MSIL standing at 5,632 units grew by 11 % over 5,076 units shipped in July 2007. The company's cumulative sales (domestic + exports) in July 2008 aggregating 58,543 units inched up by mere 1.1 % as against the previous corresponding cumulative sales figure of 57,915.

During the month, while the A3 segment, where Maruti Suzuki attained leadership position last year, continued to show strong growth, the A2 segment sales were weighed down by the adverse macro economic situation, according to the company. Maruti's volume in the domestic A3 segment in July 2008 grew by 36.8 per cent over July 2007.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter, which had started on a high note riding on the success of its latest offering i10 in the current year found the momentum slipping with a measly growth of 0.4% in domestic sales during July 2008. The company's domestic sales tally read 15,066 units during the month as against 15,003 units in July 2007.

HMIL's total sales for the month of July 2008 stood at 36,152 units. Exports adding up to 21,086 units zoomed by whopping 59.7% to help Hyundai Motor India to notch up a cumulative growth of 28.2% in July 2008.

HMIL's segment-wise cumulative sales in the month of July 2008 are as follows: A2 Segment (Santro. i10, Getz Prime) - 30,614 units; A3 Segment (Accent, Verna) - 5,504 units; A4 Segment (Elantra) 1 units; A5 Segment (Sonata Embera) - 28 units; and SUV Segment (Tucson) - 5 units.

Despite sluggish market conditions and rising fuel prices, General Motors India registered a commendable sales growth of 25% per cent in July 2008 y-o-y, piggybacking its mini-car - Chevrolet Spark, which is being offered at a very attracting price starting Rs. 2,66,000. GMI sold 5,706 units in July 2008 as against 4570 units during the same month last year. The monthly surge in sales figures is primarily driven by the Chevrolet Spark that saw a phenomenal sales growth of 120 per cent this month in India. General Motors India's July 2008 sales comprised of 3,570 units of the Chevrolet Spark, 921 units of the Chevrolet Tavera, 501 units of the Chevrolet Aveo, 344 units of the Chevrolet Optra, and 370 units of the Chevrolet Captiva.

 
The month of July also saw the Chevrolet Captiva, which was launched in January this year, emerging as a strong contender in the fiercely fought premium SUV segment.

Honda Siel Cars India (HSCI) that has lost ground to Maruti Suzuki after the launch of SX4 failed to beat the slowdown blues with its domestic sales of 4,337 units in July 2008 sliding by 4,3% from 4,533 units sold a year ago. India's first hybrid car - Honda Civic Hybrid introduced in the Indian market last month sold 52 units in the first month of its launch. Model-wise break-up of HSCI sales in July 2008: City ZX - 2948 units; Civic - 496 units; CR-V - 331 units; Accord - 510 units; and Civic Hybrid - 52 units.

Mahindra & Mahindra too witnessed domestic sales of its utility vehicles falling by 18.5% y-o-y at 6,688 units in July 2008.

However, M&M's CV sales in domestic market at 5,128 units during the month of July were on track, rising by 16.8% over 4,391 units clocked in July 2007. The company's exports of CVs adding up to 725 units also witnessed an upswing of 116%.

Tata Motors Ltd reported a total sale of 40,729 vehicles (including exports) for the month of July 2008, a decline of 3% compared to 42,098 vehicles sold in July 2007. Cumulative sales y-t-d for the company at 1,72,462 units have grown by 2%.

TML's sales of commercial vehicles in July 2008 in the domestic market aggregated 22,381 units, up 8% over 20,705 vehicles sold in July last year. While LCV sales totalling 12,284 units grew by 19%, M&HCV sales at 10,097 units reflected a decline of 3% vis-à-vis July 2007. According to the company, new and more fuel-efficient M&HCV vehicles introduced over the last few months are showing good growth.

Restricted finance availability, high interest rates, increased prices and product maturity in some segments continued to impact passenger vehicle sales of Tata Motors in July 2008. The company's passenger vehicle sales added up to 14,652 units in the domestic market in July 2008, slipping by 13.9% y-o-y. The Indica logged 7,525 units of domestic sales, falling sharply by 32% compared to the July 2007 sales figure. The Indigo family recorded sales of 4,487 units, clocking a 73% growth. The Sumo and Safari accounted for sales of 2,640 units, a 20.6% drop compared to July 2007. The company attributed the negative growth of Sumo and Safari to the impact of sudden and unexpected increase in excise duties in the latter half of June 2008.

Exports of Tata Motors at 3,696 vehicles in July 2008 declined by 16% from 4,382 vehicles exported in July last year.

Another commercial vehicle major - Ashok Leyland turned in a decent performance with its sales (domestic + exports) rising by 11.3% y-o-y in July 2008. Domestic sales at 5,502 units (5,034 units) in July 2008 were up by 9.3% and exports at 700 units (540 units) by 29.6%.

Surprisingly, two-wheelers defied the none-too-conducive market conditions to end up with a healthy growth in July 2008 riding on the perky sales numbers of Hero Honda and its sibling HMSI as well as the low base of previous year.

Hero Honda, with its consistent good performance amid downbeat market sentiment, came up trumps once again and left the other competitors far behind. The company's domestic sales at 272,664 units vroomed by massive 40%. Exports logging 3,653 units vaulted by 33.5%.

Similarly, Honda Motorcycle and Scooter India (HMSI) that is gradually climbing up the ladder to catch up with TVS Motor Company for # 3 slot was up by 15.5% in its domestic sales at 81,943 units (70,968 units) during the month of July 2008.

Bajaj Auto with domestic sales of 126,451 two-wheelers was down 4.3% in July 2008. However, the company witnessing booming exports month after month finished with a positive cumulative growth of 4.4% in its two-wheeler sales helped by 25.2% rise in its exports during the month. Bajaj Auto is expecting a strong double-digit growth in motorcycles in the remainder of the year on the back of ensuing festive season and new product launches in the 125cc + segment.

TVS Motor Company posted a 12% growth registering total two wheeler sales of 118,545 units in July 2008 as compared to 105,171 units in the corresponding month of the previous year. While domestic sales grew by 9%, exports by whopping 43%.

The auto market remains subdued and weighed down by a combination of negative factors, chiefly inflation, credit crunch and hardening of interest rates. Deceleration in industrial production and moderation in economic growth are making it all the more difficult for auto industry to wriggle out of the slowdown mode.