October Sees Highest Car Sales Growth In 22 Months

The automobile industry body SIAM (Society of Indian Automobile Manufacturers) released data that showed robust growth in segments like passenger cars, utility vehicles (UV) and scooters. The overall sales volume growth of 14.81 per cent on a YoY basis can be attributed to a pick-up in demand on account of the festive season and a low base in October 2011.

Passenger vehicle sales’ volumes grew by 33.65 per cent in October 2012. This was pushed upwards by passenger car sales which grew by 23.09 per cent YoY. Most of this growth was contributed to by Maruti Suzuki (MSIL) which had sales growing by 86.56 per cent in October 2012. MSIL had a low base in the previous year due to a production halt at its Manesar facility. Moreover, the recent brawl at the same plant caused production to halt for more than a month causing inventory to dry out and demand to pile up. This thus resulted in high volume growth in October 2012.

With this overall passenger car sales for the period April-October 2012 became better, growing YoY by 2.84 per cent. SIAM recently announced a downward revision of the forecasted growth of this segment from 3 per cent to 1 per cent for FY13. This move came in after the April-September YoY sales growth was -0.27 per cent. The festive season has indeed managed to lift sentiment. However, on account of unchanged macroeconomic conditions, which caused lower demand in the first place, we think FY13 growth for passenger cars will be in sync with its forecasts.

Recently changing trends like high demand for UVs and Light Commercial Vehicles (LCV) and low demand for Medium and Heavy Commercial Vehicles (M&HCV) have been panning out in the last few months. These trends can be seen in October 2012 wherein UVs grew by 87.74 per cent on a YoY basis. The 7.59 per cent growth in commercial vehicles in October 2012 was supported by strength in the demand for LCVs. This is also visible from the 3 day closure of production at Tata Motor’s Jamshedpur facility on account of plummeting demand for commercial vehicles.

On the two-wheeler front, October marked the first month in FY13 of positive growth for all of the four largest players in the industry (Hero, Bajaj, Honda and TVS). The YoY sales growth for scooters, mopeds and motorcycles in October 2012 came in at 32.39 per cent, 23.21 per cent and 6.71 per cent respectively. The boost in motorcycle and moped sales massively helped TVS Motors grow by 3.66 per cent after having marked a double digit decline in the last three months. Moreover, Honda managed growing strongly yet again posting a 40.65 per cent growth in October 2012.

October 2012 has marked a reversal in the downward trend, as automobile manufacturers were expecting. However, the macro economic conditions being unfavourable and stagnant, whether there has been an actual change, ignoring the festive season boost, would only be clear with figures for November being released.