Slow September For Car Makers

Auto sales have always seen a massive pick-up in sales volume in the third quarter of every financial year with October being the beginning of the festive season. FY13 has been rather gloomy for auto sales with sluggishness observed in every month of the year. September was no different and while volume growth went negative for Tata Motors Limited (TML), the double-digit growth seen by Mahindra & Mahindra (M&M) slipped into single digits. However, Maruti Suzuki India Limited (MSIL) recovered from the production crisis caused at its Manesar plant. 

MSIL witnessed a YoY decline in sales volume of 40.78 per cent in August 2012, sales being severely hampered due to the more than a month long production halt seen at the company’s Manesar production facility on account of the violent outburst between the management and labour. The company saw its inventory running out for key models like Swift and Dzire but kept orders flowing in. They started partial production beginning on August 21, 2012 and managed a 9.84 per cent growth in sales volume in September 2012 as compared to September 2011. Exports too were very weak, declining by 23.14 per cent.

This growth, however, isn’t indicative of the overall four-wheeler trend due to the continuing demand and no supply situation seen over the production halt that led to a burst of sales when production resumed. The company has now expressed hopes to be able to produce 1,600 units per day at Manesar, which is very close to the capacity of the plant.

In the case of TML, weakness was seen in all the segments that the company operates in, other than light commercial vehicles (LCV) and Nano, which grew by 18.87 per cent and 87.02 per cent respectively. Overall, the commercial vehicle (CV) sales were supported by LCVs like the last few months and the heavy and medium commercial vehicles’ (M&HCV) sales continued the double-digit downward trend. This combined with weak passenger vehicle sales dragged the overall TML sales down by 3.82 per cent.

M&M maintained a better than industry average performance in September 2012 as well though it was subtle and came down to 9.53 per cent. This figure was seen between 16.13 per cent and 28.16 per cent in the months of FY13 so far. The company has been witnessing continuous exceptional demand for XUV 500 and has also received over 3,000 bookings for the newly launched mini-SUV Quanto. Mahindra Navistar Automotives Limited’s (MNAL) sales remained in the positive and saw a mild growth of 2.27 per cent YoY. The company also announced a price raise in the range of 0.5 per cent and 1.5 per cent following the recent increase in prices by MSIL, Renault, General Motors and Honda.

Among other car manufacturers, Ford Motors and General Motors too announced their sales figures, posting de-growth of 8.29 per cent and 26.78 per cent. Ford managed to sell 9,418 vehicles in September 2012 as compared to 10,270 in September 2011. General Motors took a bigger hit and managed to sell 7,403 vehicles in September 2012 as compared to 10,112 in September 2011. General Motors is to now launch its multi-purpose vehicle (MPV) in October and is considering the use of its platform to foray into the LCV market. The company had invested approximately Rs 1,125 crore to make an entry into this segment. This would hopefully improve the overall sales of the company in India. Toyota Kirloskar too saw a decline in September 2012 of 5 per cent, with a major decline in the Etios range which the 23 per cent growth in Innova sales and 21 per cent growth in Fortuner sales couldn’t offset.

With sales figures not being impressive for yet another month, auto makers are now looking at the much-awaited October for a revival in sales volumes.