Passenger Vehicle Market Slips

The growth of passenger vehicles in the world's second-fastest growing major auto market has been decelerating since March'11, dented by rising costs, costlier loans and higher fuel prices. The month of July'11 saw these headwinds take a heavy toll on passenger vehicle sales with growth sliding into negative terriain for the first time in over two years post global financial crisis.

The domestic vehicle sales across all segments logged a 9% rise at 1,348,753 units during July'11 as compared to 1,237,521 units in July'10. 2-wheelers held steady, conquering the roadblocks on the way, with a growth of 12.6% in domestic sales at 1,056,906 units.

While domestic sales of 3-wheelers buckled under pressure in July'11 falling by 3.1% y-o-y to 43,949 units, 3-wheeler exports zoomed by 46.3% to 32,176 units, more than making up for the loss in domestic sales.

Consolation for the market was that commercial vehicle sales, often regarded as the barometer of economic health of a nation, stayed on course and ended up on a decent 23.70% growth during the month.

Passenger vehicles that have been on a bumpy ride since March'11 in the domestic market witnessed a 9% dip from 201,704 units a year ago to 183,657 units in July'11, with major companies such as Maruti Suzuki, Hyundai Motor India and Tata Motors taking a hit.

Maruti Suzuki India Ltd (MSIL) clocked total sales of 75,300 units in July'11 as against 100,857 units during the same month last year, posting a negative growth of 25.3%. Maruti Suzuki's domestic sales at 66,504 units were down 26% y-o-y during the month. The company's exports tally was not flattering either with exports slipping by 18.1% from 10,743 units a year ago to 8,796 units in July'11. The company attributed the fall in domestic sales to the stoppage of production of the Swift hatchback ahead of the introduction of its upgraded version and the shifting of production of Swift Dzire from Manesar plant to Gurgaon, which negatively impacted the sale to the tune of 17,000 units in July'11.

Hyundai Motor India Ltd (HMIL), the second largest player in car market witnessed an 11 % drop in its domestic sales to 25,601 units in July'11 from 28,811 units a year earlier. However, the company's exports were in top gear, clocking 24,025 units in July'11 vis-à-vis 21,600 units in July'10. Total sales fof HMIL at 49,626 units, posting a negative growth of 1.6% y-o-y during the month.

The segment-wise cumulative sales of HMIL for the month of July 2011 were as follows: A2 segment (Santro, 110, i20) - 41,533 units; A3 Segment (Accent & Verna) - 7,980 units; A5 segment (Sonata Transform) -13 units; and Santa Fe (SUV) -141 units.

Arvind Saxena, Director - Marketing and Sales, said, "The July'11 sales for both the Industry and HMIL have been negative. Though the customer enquiries have increased, conversion rate has slowed down due to the increase in fuel prices and interest rates."

Ford India too witnessed a 14.1% decline in its domestic sales that slid from 8,739 units in July'10 to 7,504 units during July'11. However, the company's exports posted a hefty 301% increase y-o-y during the month. Ford India exported more than 3,202 cars to 26 markets, including 7 new ones, in July'11.

"It is great to see that in addition to selling over 100,000 units here in India, overseas demand for Figo is high and consistently boosting our exports," said Boneham, President and MD, Ford India.

 
Driven by the spectacular sales performance of its sedan Etios and newly introduced hatchback Liva, Toyota Kirloskar Motor (TKM) registered sales of 13,592 units in July'11 as compared to 6,834 units in July'10, growing by staggering 99% during the month.

Sandeep Singh, Dy Managing Director, Marketing, TKM said, "The month of July has seen an impressive growth indicative of growing volumes and increasing sales of Toyota vehicles in India. The customer response to Etios and Etios Liva has been very good. Etios and Etios Liva sold 40,95 units and 2,551 units, respectively, in July 2011."

The sales performance of Tata Motors Ltd in July'11 followed the same pattern as in the previous few months. While the company's commercial vehicles stayed on a growth trajectory, passenger vehicle sales tumbled. The total sales (including exports) of Tata commercial and passenger vehicles in July'11 clocked 63,761 units, lower by* 6% compared with July'10. Domestic sales of Tata commercial and passenger vehicles at 57,990 units also reflected a 9% drop from the corresponding month last year.

Passenger Vehicle Business Unit of Tata Motors sold 17,192 units in the domestic market during July'11, down 39% from 27,865 units a year ago. Sales of its Nano minicar plunged by 64% to 3,260 units during the month, while the Indica sales at 5,860 units, were lower by 32% vis-à-vis July'10. The Indigo range sales stood at 4,877 units, recording a negative growth of 30% y-o-y. The domestic sales of Sumo/ Safari/ Aria/ Venture also took a hit falling by 2% y-o-y to 3,195 units during the month.

Tata Commercial Vehicles turned in a reasonably good performance, witnessing 14% growth in domestic sales at 40,798 units during the month of July'11. The company's exports grew by a healthy 36% to 5,771 units in July'11.

The second biggest CV maker, Ashok Leyland Ltd (ALL) regained traction by posting domestic sales of 6,774 units in July'11 from 6,022 units in July'10, which represents a growth of 12.5%. The company's exports also showed robust growth of 46.2% y-o-y to 1,060 units during the month.

Mahindra & Mahindra (M&M) posted 43% surge in its domestic sales, which stood at 36,179 units during July'11 as against 25,296 units during the same month a year back.

M&M's passenger vehicles segment (which includes the UVs and Verito) registered a growth of 35%, having sold 17,312 units in July'11, as against 12,825 units in July'10. Mahindra 3-wheelers sales dipped marginally by 0.4% y-o-y to 5,395 units during the month.

Speaking on the numbers, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra Ltd said, "We are delighted with the 41% growth in our automotive business in July and the record for highest ever sales. All our brands have been doing very well and Verito continues its very strong demand momentum."

General Motors India (GMI) turned positive in July'11 on the back of its new models. GMI sold 9,465 units as against 7,069 units in July'10, recording a healthy growth of 34% y-o-y, thanks to the diesel variant of Beat.

Putting a halt to its slide, Honda Siel Cars India (HSCI) sold 4,725 units in the month of July'11 as against 4,685 units during the corresponding month last year registering a growth of 1%. Model wise sales break-up of HSCI is: Jazz - 361 units; City - 2,802 units; Civic - 175 units; Accord - 103 units; and CR-V - 14 units.

Maintaining the buoyancy, the sales of two-wheelers were on track during July'11.

Hero MotoCorp (formerly Hero Honda Motors Ltd) continued its impressive run with a 15.2% increase in its domestic sales to 477,714 units during July'11.

Anil Dua, Sr Vice-President (Marketing & Sales), Hero MotoCorp, said, "This start has clearly set an upbeat mood and we are confident that Hero MotoCorp will now make rapid strides to further strengthen its leadership by continuing to launch innovative products and following a customer-centric approach. We are looking to ride our current buoyancy into the festive season by launching our new identity, innovative products and engaging campaigns."

Bajaj Auto Ltd carried forward the growth momentum, albeit at a slower clip. The company's 2-wheeler sales volume in domestic market witnessed a 5.3% rise to 202,326 units in July'11 over 192,138 units in the same month a year ago. Exports of Bajaj two-wheeler were buoyant and grew by a handsome 32% to 115,769 units during the month.

TVS Motor Company too sustained the tempo of growth in July'11, registering 12% increase in domestic sales of two-wheelers at 160,348 units. The company's two-wheeler exports were also in fast lane, recording a 31.2% growth y-o-y to 26,324 units.

India's industrial output rose by 8.8% in June, vis-à-vis upward revised 5.9 per cent in May, propelled by the volatile capital goods segment that grew by over 37%. However, economists believe that the trend may not be sustained, as it did not correlate with an economy buffeted by high interest rates and inflation. Nonetheless, the factory output numbers bring in a whiff of fresh air. Add to this is the fact that the commercial vehicles continue to grow, reflecting that the economy is up and kicking. Especially with a number of new offerings in pipeline, second half of the current fiscal is expected to be better.