Auto Industry In A Juglar Cycle, Maruti Suzuki And M&M Face The Brunt

It was in August 2013 when the auto industry witnessed a double digit growth of 15.4%, it is eight months since then, that Indian auto companies are struggling to post a growth of double digits. Weak domestic demand has continued to impact the sales of the auto manufacturers in India. The sales of most of the companies have continued to remain sluggish, whereas during this tough scenario the two wheeler manufacturers remained to show some positive outlook.

Maruti Suzuki, the largest car maker in India has posted fragile vehicle sales for the month of April 2014. The company has sold total 86196 vehicles, reporting a fall of more than 11% on YoY basis during April 2014. The total sales reduced due to slow pace of domestic sales, as the domestic sales of the company have reduced by 12.6% for the month of April by selling 79119 units. But still there was a point of relief for the company as the export sales have increased by 4.4%, by selling 7077 units as compared to the same month of previous year. On segment wise, except compact car, all the other segments have seen de-growth during the first month of FY15. The sales from the compact car have increased by around 10% on yearly basis to 23659 units during April 2014.

The situation for Mahindra & Mahindra (M&M) was also similar. The total sales of M&M have plunged by 12.44% YoY by selling 36274 units for the month of April 2014. The low domestic demand resulted in low domestic sales. The domestic sales have plunged by around 15% on yearly basis by selling 34107 units during the month of April 2014. The export was up by 42% on yearly basis on selling 2167 vehicles for the month of March 2014. This indicates that the company is trying to increase its exports to compensate the domestic slow demand.

A similar trend was observed in sales of tractors. The tractor sales of M&M have contracted by around 11% during April as compared to the same month of previous year. The domestic demand has subdued by 10% by selling 19895 vehicles, while the export has reduced by around 17% by selling 836 tractors for the month of April 2014 as compared to the same month of previous year.

With the help of better export Bajaj Auto was able to arrest its sales drop to 4% on yearly basis. The export of the company has increased by 16% on yearly basis to 150714 units against total sales of 331529 vehicles for the month of April 2014. On segment wise the commercial vehicle segment has contracted by 26% while the motorcycle segment has remained flat.

Bucking the trend there are some companies which have created some excitement in the market. Hero Motocorp was one such company which has posted total sales of 571054 vehicles, marking a jump of 14% on yearly basis during the month of April 2014. 

TVS Motor was another company which posted a growth of 15% on total sales during April 2014 as compared to the same month of previous year. On yearly basis the two wheeler and the three wheeler segment has seen growth of 14% and 59% respectively by selling 183179 vehicles and 7504 vehicles during the month of April. The export of the company has also increased. The export increased by 41% YoY to 30650 units for the month of April 2014.

On one side where the top auto makers are struggling to control its contraction in sales, the two wheeler companies are posting handsome growth. This is mainly due to good monsoon this time. But the story is not going to stay the same for a longer period, as due to malign effect of the hailstorm and El Nino many agricultural and industry utilized crops were destroyed. This will of course take a toll on the sale of two wheelers in the coming months.