Festive Cheer For Some Automakers, Not All 

The festive month of October’s turned out to be a mixed bag in terms of automobile sales, with some manufacturers reporting double-digit growth, even as some including India’s largest passenger vehicle manufacturer Maruti Suzuki India Ltd. saw a marginal dip in total sales.

Typically, the October-December quarter is a busy season for automakers with festive buying boosting sales. The festive season in India begins towards the end of September and goes on till November or beyond.

Passenger Vehicles

Vehicle sales have shown a consistent rise through the ongoing financial year (April-March), but unlike most months where Maruti Suzuki led the growth, October was flat for the Indian arm of the Japanese manufacturer, as total sales contracted 0.3 percent on a year-on-year basis, largely due to a fall in exports and a sharp drop in its mini-hatchback sales.

Total sales for Maruti Suzuki in October stood at 1,33,793 units versus 1,34,209 vehicles sold in the same month a year ago, even as exports plunged nearly 24 percent to 10,029 units. Domestic sales for the automaker did rise 2.2% year-on-year to 1,23,764 units, but the same was largely supported by the recently-launched model, Vitara Brezza, which sent utility vehicle sales sky-rocketing to 18,008 units, a jump of 91 percent year-on-year. It is also important to note here, that Maruti Suzuki is currently facing a supply constraint with its two plants in Gurgaon and Manesar already running above their combined installed capacity of 15 lakh units a year, which falls short of the monthly sales pattern of over 1,25,000 units. It’s only when the company’s Gujarat plant gets commissioned from February can one expect the monthly sales number to see an uptick.

The second-largest passenger vehicle manufacturer by volume in the country, Hyundai Motor India Pvt. Ltd., reported a modest 4.3 percent year-on-year rise in volumes at 64,372 units, as its domestic sales rose 6.4 percent to 50,016 units.

Tata Motors Ltd. reported its highest monthly passenger vehicle sales number in four years at 16,311 units, up 28 percent from 12,747 units sold in October 2015. In contrast, peer Mahindra & Mahindra Ltd.’s volumes rose 3 percent to 24,737 units.

While Ford India Pvt. Ltd.’s total sales rose 7.9 percent to come in at 22,043 units, its domestic volumes, which make up only a small part of the total dispatches, contracted 25 percent to 7,508 units. Nissan Motor India Pvt. Ltd. reported an 88 percent jump in volumes, year-on-year, buoyed by sales of the redi-GO hatchback from the Datsun stable.

Honda Cars India Ltd. witnessed a 21.8 percent fall in its total dispatches at 15,856 units. The automaker had sold 20,300 units in October last year.

Commercial Vehicles

Even as the segment has shown an uptrend over the past two quarters, the medium and heavy commercial vehicles (M&HCV) segment has been a dark spot in the overall picture. October did see a handsome rise in light commercial vehicle (LCV) sales, and the M&HCV segment also witnessed some revival.

The largest player in the segment, Tata Motors, saw a 15 percent year-on-year rise in total volumes at 30,169 units, led by a 21 percent rise in its LCV sales, even as M&HCV sales rose 9 percent. The company’s M&HCV segment saw a year-on-year rise for the first time in five months.

Commercial vehicle dispatches for Mahindra & Mahindra (M&M) were at 18,059 units, down 4 percent from 18,756 units sold a year ago. Surprisingly, even LCV sales for the automaker were down 3 percent at 17,182 units, and M&HCV sales fell 19 percent to 471 units.

Eicher Motors Ltd.’s joint venture with Volvo Group, Volvo-Eicher Commercial Vehicles, sold 4,560 units in October, a jump of 14 percent, year-on year. Chennai-based Ashok Leyland Ltd. witnessed a healthy 28 percent year-on-year surge in its total sales to 12,533 units.

Two-Wheelers

Two-wheeler sales are typically more affected by factors such as the festive season and rains, with a sizeable portion of sales coming from the rural areas. India received good rains across most parts during the monsoon of 2016, but the impact could be seen only after the harvest season.

Market leader Hero MotoCorp Ltd. posted a modest 3.6 percent year-on-year growth during October at 6,63,153 units. The two-wheeler manufacturer had sold 6,39,802 units in the year-ago period, according to data available on its website.

Sales of Pune-based Bajaj Auto Ltd., which sells only motorcycles in the two-wheeler category, were muted in October. The company sold 3,07,892 units in the month gone by, compared with 3,08,733 units despatched in the year-ago period.

Chennai-based TVS Motor Co. Ltd. retailed 3,03,885 two-wheelers during the month, up 15.1 percent year-on year, even as sales of peer India Yamaha Motor Pvt. Ltd. grew 22 percent to 86,428 units.

India’s second largest two-wheeler manufacturer Honda Motorcycle and Scooter India Pvt. Ltd. also saw its sales increase by nine percent, year-on-year selling more than 12.5 lakh units in a single month for the first time ever.

What Lies Ahead?

Sales within most segments have shown definite signs of a rebound. The festive month of October was however below the expectations of most brokerages in terms of sales volumes.

An indicator of the cautiously optimistic sentiment prevailing in the market is the high level of discounts still being offered by most automakers. Barring recent launches, and the top sellers, most models in the passenger vehicle and two-wheeler space are still being offered at a discount.

Demand for medium and heavy commercial vehicles is one of the indicators of the health of an economy. While there has been some sporadic signs of recovery in the sector, a definitive recovery pattern has not been visible thus far, with sales contracting for most automakers month after month.

November is another festive month in India, and volumes can be expected to show a positive trend through the month, before the market goes into December, which is typically slow in terms of sales, as buyers prefer waiting for a month to get a vehicle in the new calendar year.