Off to a Steady Start

Auto market got off to a steady start in 2011 amidst growing concerns over likely slowdown in demand due to inflation, rising interest rates and higher fuel costs. The growth was boosted by the strong vehicle sales in domestic market that grew by 18.7% to 1,322,979 units during Jan'11. Total industry sales (domestic + exports) in Jan'11 zoomed to 1,516,636 units from 1,265,472 units in the corresponding month of 2010, rising by a decent 20%.

In the year gone by, India was one of the largest car markets in the world logging 30% plus growth with 2.3 million cars being sold during the year 2010. The robust domestic demand driven by the burgeoning middle class and rising income levels is expected to make India the fourth largest car market by 2015, according to a study conducted by Booz & Co., Global Consultant.

Passenger vehicles sales in domestic market grew 24.7% y-o-y to record 2.34 lakh units in Jan'11, beating the previous best monthly sales of 2.32 lakh units recorded in Oct'10.

Other segments of auto market, too, cruised along nicely, posting healthy sales and growth numbers, thanks to the improving economic outlook and subsiding job uncertainties.

Two-wheelers clocked a 17.6% rise in domestic sales to 9.81 lakh units, with rural and semi-urban markets contributing heavily to the tally. After slowing down a tad in Nov & Dec'10, two-wheeler exports picked up steam soaring by a staggering 46% y-o-y to 130,098 units in Jan'11.

Likewise, CVs and 3-Wheelers too turned in decent sales performance growing by 12.6% and 22.6% respectively and shrugging off the slowdown in industrial output growth rate. The growth numbers could have looked better, but for the production constraints especially in the case of commercial vehicles, due to change in emission norms from 1st Oct'10.

The only thing at odds with an otherwise rosy scenario was the exports of passenger vehicles, which have been witnessing a free fall for some time due to tepid recovery of European market from the recession. The passenger vehicle exports stayed in the negative terrain and were down by 14.7% at 32,942 units.

Car market leader Maruti Suzuki India Ltd that accounts for nearly one of every two cars sold in the country, growing at 14.7% in terms of its total sales, set the pace for the record domestic sales of passenger vehicles in a month. Maruti Suzuki posted sales of 109,743 units. While the domestic sales grew by 23.8 per cent to 100,422 units, the exports remained a concern and dropped by 36% to 9,321 units in Jan'11 from 109,743 units a year earlier. The company’s exports tally was, incidentally, the lowest in the last 4 months.

MSIL's sales were up 23.8 per cent in A2 segment, 32.6 per cent in A3 segment and 27.7 per cent in C segment.

During Jan'11, the company's cumulative sales in the current fiscal crossed one-million-mark at 10,37,408 units. This was achieved in a record period of less than 10 months. The company had crossed the 10-lakh total sales in a year for the first time in 2009-10.

Hyundai Motor India Ltd (HMIL), the country's second largest car manufacturer and the largest exporter reported a dip in sales, which were dragged down by falling exports. The exports stayed on a slippery surface, falling by 43.5% during the month to 13,010 units. In the domestic market, sales were marginally up, growing at 2.4% to 30,306 units. The company attributed the slow growth in the domestic market to primarily a shutdown in the plant, due to which over 5,000 cars could not be delivered.

 
The segment-wise cumulative sales of HMIL during the month of Jan'11 were as follows: A2 segment (Santro, 110, i20) - 39,343 units; A3 Segment (Accent & Verna) - 3,957 units; A5 segment (Sonata Transform) -11 units; and Santa Fe (SUV) - 5 units.

Arvind Saxena, Director - Marketing and Sales, HMIL, said, "Hyundai continues to be on a steady growth path, riding on the strong performance of its compact cars. We expect the domestic market to continue to grow, although the rate might come down to a low double digit this year."

Thanks to the good sales numbers logged by Chevrolet Beat, Spark and Cruze, General Motors India (GMI) registered a 6% growth selling 9,984 units in Jan'11, compared to 9,421 units during the same month previous year.

The Jan'11 sales of GMI comprised 3,272 units of the Spark, 3,345 units of Beat, 1,691 units of Tavera, 715 units of Cruze, 243 units of Aveo, 331 units of Aveo U-VA, 296 units of Optra and 91 units of Captiva.

Ringing in 2011 with a bang, Ford India clocked sales of 10,026 units in the domestic market, an impressive 309% growth compared to 2,453 units sold in Jan'10. This marks the best monthly sales performance ever by the company since the start of its India operations. The sales of multi-award-winning Ford Figo also hit an all-time new monthly high since its launch in Mar'10, with more than 8,600 units sold in January.

"2010 was a landmark year for us, with Ford nearly tripling its annual sales volume. Now we've begun 2011 with record-setting January sales. We have carried the momentum of last year's terrific performance into the new year by crossing the 10,000-unit sales mark," said Michael Boneham, President & MD, Ford India.

Tata Motors' sales (including exports) of commercial and passenger vehicles in January added upto 75,423 units posting a significant growth of 15% over 65,478 vehicles sold in January last year. The domestic sales volume of Tata commercial and passenger vehicles aggregating 70,475 units during the month grew by 13%.

Passenger Vehicles Business Unit of Tata Motors reported sales of 30,212 units in the domestic market in Jan'11, higher by 15% over 26,245 units in January 2010. Tata Nano sales were 6,703 units, surging by a healthy 68% y-o-y. The Indica range sales at 10,591 units were down 8%, while the Indigo range recorded a 17% growth in sales at 8,456 units. The Sumo/Safari/Aria/Venture range posted sales of 4,462 units, higher by 26% y-o-y.

The sales of Tata commercial vehicles in domestic market during Jan'11 stood at 40,263 units, a 12% increase compared to 35,957 vehicles sold in January last year. LCV sales clocked 23,776 units, a growth of 17% over Jan'10. M&HCV clocked 16,487 units of sale, representing a 5% growth y-o-y.

The company's exports totalling 4,948 vehicles in Jan'11 registered a growth of 51% over 3,276 vehicles exported in January 2010.

Ashok Leyland Ltd (ALL) recorded a marginal dip in its total sales at 7,711 units (including exports of 831 units) during Jan'11. Domestic sales declined by 7% to 6,880 units from 7,460 units a year ago. However, exports at 831 units witnessed a steep growth of 102%.

UV major, Mahindra & Mahindra (M&M) saw its utility vehicle sales in domestic market growing by 14% to 16,460 units during the month of Jan'11 from 14,425 units a year ago. Domestic sales of Mahindra commercial vehicles were marginally up by 3% y-o-y to 9,820 units, while the company's 3-wheeler sales volume comprising 6,177 units in domestic market climbed up by 37% y-o-y. M&M's sales tally of 36,718 units (including Logan sales + exports) during Jan'11 was the highest ever in a month and increased by 22%, as against 30,149 units during Jan'10.

Hero Honda Motors Ltd (HHML) sustaining the momentum, registered a growth of 19.7% crossing 4-lakh plus mark in monthly sales for the ninth time this financial year. While the domestic sales of 2-wheelers at 457,362 units rose by 19%, the exports aggregating 9,162 units were up 73.4% year-on-year.

Rising by a healthy 18.3%, Bajaj Auto's total sales of 2-wheelers (including exports) added up to 275,622 units during Jan'11. The exports climbed by a hefty 56% to 83,596 units, while the domestic sales of Bajaj 2-wheelers grew by 7.2% y-o-y to 192,026 units. Pulsar and Discover brands accounted for 68% of the company's motorcycle sales.

TVS Motor witnessed a robust growth of 29 per cent in its total sales of two-wheelers at 161,725 units in Jan'11 from 125,578 units a year ago. Scooter sales posted an impressive 60% growth with sales of 40,736 units as against 25,509 units recorded in Jan'10

Other two-wheeler major players in the Indian market, namely, India Yamaha Motor, Suzuki Motorcycle India and M&M two-wheelers were also in fast lane, witnessing a substantial rise in their sales.

While the year 2011 has begun on a happy note, volatility in IIP growth that plunged to a 20-month low of 1.6% in December 2010 and stubborn inflation, coupled with rising commodity prices and interest rates, are major concerns for auto market going forward. However, the sentiment remains bullish, which may keep the momentum going, albeit not at a feverish pace witnessed last year.