Sluggish Spell Stays Put

The slowdown continued to enlarge and widen its shadow on auto market in the current financial year, as reflected in the sales performance of some of the manufacturers and the industry's segments in July 2007. Although the car segment growing steadily at 11.5% has been able to beat the slowdown blues, thanks to the excitement created by some of the new models introduced in the market in the current financial year, this growth rate is dwarfed by the robust growth of over 20% in the previous year. The performance is, nevertheless, comforting, as the think-tanks and experts in the industry and outside had anticipated the growth to moderate at a level of 12-15% and did not expect the car sales to clock over 20% in the current year as well.

That commercial vehicles and two-wheelers have not able to come out of the rut and continue to post the lacklustre numbers remains a cause of concern. The two-wheeler segment, in particular, is the worst affected and has taken a heavy blow with 10% fall in sales in the month of July 2007.

Bucking the sluggish trends in other segments, the car sales in domestic market came up trumps in the month of July 2007, keeping the interest rate squeeze at bay, although performance across manufacturers witnessed wide fluctuations. Car market leader Maruti Udyog Ltd sold 52,839 vehicles in the domestic market in July 2007 as against the corresponding sales figure of 44,653 vehicles in July 2006. In all, Maruti Udyog sold 57,909 vehicles in July 2007. This includes 5,070 units of exports. Compared to the sales in July 2006, Maruti's volume in the domestic A2 segment grew by 18.5 per cent, in A3 segment by 105.1 per cent, and 'in C segment by 4.6 per cent.

Riding on the launch of Chevy Spark, General Motors India registered an impressive growth of 87% in sales during July 2007 as compared to the corresponding month last year. The company sold 4,570 units in July 2007 as against 2,450 units sold in July 2006. The July 2007 sales comprised of 1,601 units of Chevrolet Tavera, 1,119 units of Chevrolet Aveo, 450 units of Chevrolet Optra and 1,400 units of the mini car Chevrolet Spark.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest passenger car exporter, on the other hand, had to piggyback its export performance that contributed a sizable number to its overall sales to report a 14.6% growth in July over the same month last year. The total sales stood at 28,203 units. While the domestic market accounted for 15,003 units, exports totalled 13,200 units in July 2007. As compared to July 2006 (16,209 units), domestic sales were down 7.5%, even as exports grew by 57% over 8,406 units in July 2006. The segment-wise cumulative sales of HMIL in the month of July 2007 are as follows: A 1 Segment - 24,044 units; A2 Segment - 4,094 units; A3 Segment - 9 units; A4 Segment - 34 units; and SUV Segment - 22 units.

 
Honda Siel Cars India (HSCI) with a sales figure of 4,533 units in July 2007 slid 17% from 5,461 units recorded a year earlier. HMSI's modelwise sales break-up for July 2007 is: City - 2,626 units; Civic - 1,385 units; Accord -297units; and CRV - 225 units.

HSCI started with a bang in the calendar year 2007. However, the sales have started tapering off from May 2007 onwards. The cumulative sales in the first four months of FY 2007-08 (April-July 2007) at 18,738 units as against sales tally of 17,713 units in April-July 2006 represents an increase of 5.8%.

Tata Motors reported a total sale of 42,098 vehicles (including exports) during the month of July 2007, a decline of 6.6% vis-à-vis July last year. Cumulative sales for the company at 169,459 units in the current financial year are flat. The company attributed the sluggishness of the domestic market to the high interest rate regime, affecting retails.

TML's Passenger Vehicle Division clocked total sales of 17,011 vehicles in domestic market in July 2007, recording a negative growth of 6.7% y-o-y. Despite a declining and a tough market, the company has been able to hold its sales at May 2007 levels of 17,000 units plus for the past three months. The Indica reported sales of 11,097 units, down 7% y-o-y. The Indigo family witnessed sales of 2,591 units, just managing to float above the sales figure recorded a year ago. The Sumo & Safari accounted for sales of 3,323 units, reflecting a decline of 10%.

The company's sales of commercial vehicles in July 2007 in the domestic market added up to 20,705 units, a decline of 3.8% vis-à-vis 21,534 vehicles sold in July last year. M&HCV sales stood at 10,367 units, falling by 14.6%, while LCV sales at 10,338 units, notched up a 10% growth over July 2006.

Tata Motors' exports at 4,382 vehicles in July 2007 declined by 17% as compared to 5,284 vehicles in July 2006.

Ashok Leyland just nudged past its domestic sales figure of 4,970 units a year ago to record 5,034 units of domestic sales in July 2007. The company's exports at 540 units posted a robust growth of 107% y-o-y, albeit on a small base.

Mahindra & Mahindra continued strong growth of Q1 F08 into the month of July clocking vehicle sales of 19,163 units (including UVs, Logan, LCVs and 3-wheelers as well as their exports) in July 2007. This translates into a growth of 46% over the same month last year. Mahindra Renault sold 2890 units of sedan - Logan, in the month of July.

M&M's domestic sales added up to 18,536 units as opposed to 12,481 units in July 2006, a growth of over 49%. The company exported 627 vehicles in July 2007 - a 4% dip in contrast to 655 units in the corresponding month last fiscal.

The July sales figure marked the rollout of 2 million^th vehicle from M&M, which is a significant sales milestone. On the occasion, Dr Pawan Goenka, President, Automotive Sector. M&M said, "Over the last 60 years volumes have grown at the rate of 9% per annum, while CAGR in the last 5 years has been 22%. UV sales accounted for 82%, LCVs - 9%, 3-wheelers - 6% and exports contributed 3% to the 2-million mark. The roll out of the 2 million^th vehicle is an indicator to our exponential growth in the industry as an automaker." Over the last decade itself, Mahindra has sold 1 million vehicles.

The two-wheeler sales reports for the month of July 2007 are not something to rave about. Barring HMSI, all other two-wheeler majors have reported sales numbers, which tell their own story of slowdown besetting the segment.

Hero Honda Motors Ltd (HHML) sold a total of 201,191 two-wheelers during the month of July 2007 as against the sales figure of 235,314 units in the corresponding month last year, thereby registering a negative growth of 15%. HHML crossed one-million mark with cumulative sales of 1,004,044 units for the period April-July 2007. Despite the industry slowdown, Hero Honda has strengthened its market share over the year. The company believes that the fundamentals of the economy are strong, and is optimistic about the industry coming back on growth path closer to the festival season.

The second largest two-wheeler player - Bajaj Auto Ltd (BAL) was also down in the dumps with a 16% decline in its domestic sales during July 2007. However, the company's exports growing by 39% made good a major part of company's declining sales in the domestic market. BAL's total sales in July 2007, including exports, at 162,801 fell by 6%.

The sales numbers of TVS Motor Company for the month of July 2007 are equally depressing if not distressing. TVSM reported total two wheeler sales of 105,366 units in July 2007 compared to 121,462 units in July 2006, plummeting by 13.4%. The company's motorcycle sales aggregated 44,392 units as against 68,335 units in July 2006, witnessing a massive fall of about 35%.

TVS Scooty sales clocked 23,841 units in July 2007 compared to 25,356 units recorded a year ago. TVS Motor exported 11,395 units of two wheelers in July 2007.

RBI's quarterly review of Monetary Policy for the year 2007-08 released recently makes it clear that there is going to be no let-up in credit squeeze and easing of interest rates in the near future. The silver lil1ing is that the Indian economy continues to perform reasonably well although not at the pace witnessed last year. Things are expected to stabilise with sales gathering momentum in the second half of the year.