December Discounts Fail To Woo Vehicle Buyers

Over all the months of FY13 so far, the automobile industry has been facing troubles. While most companies have been weighed down by systemically hampered demand, a few have aced because of apt product placement. The industry was expecting a turnaround this festive season, but lethargic sales led to melancholic auto makers. And now, the usual December discounts too have failed to attract buyers.

YoY Sales Volume Growth (%) For Four-Wheelers

Note: Drastic fluctuations in Maruti Suzuki due to production disruptions

Maruti Suzuki has reported an increase of 3.24% in December 2012 over the previous year. The sales of passenger cars and vans were subdued, the volumes having decreased by 0.87% and 0.14% respectively over December 2011. Lately, the passenger car industry has been driven by diesel cars and Utility Vehicles (UVs). If it weren’t for UVs, Maruti’s total sales would have declined by 2.42%.

Tata Motors was massively affected by subdued demand trends, and witnessed a heavy slowdown in December 2012. The company’s overall sales declined by 20.29% on a yearly basis. A decline in sales was witnessed in all the segments that it is present in, other than in Light Commercial Vehicles (LCVs). Passenger vehicles, Medium & Heavy Commercial Vehicles (M&HCV) and exports declined by 50.94%, 45.93% and 30.86% respectively. LCV sales have been on the rise in recent times, and have been supporting the overall sales of Commercial Vehicles (CVs). The sales volumes in LCVs grew by 27.62% in December 2012.

Over these months where sales were hit, Mahindra & Mahindra (M&M) had been consistently outperforming its peers. Although it still managed to outperform, it registered a sales volume growth of 5.93%, which was the lowest in FY13 (YoY). This was driven by passenger vehicles, which grew by 17.68%. The company’s M&HCV sales continued to be affected, and the segment’s sales declined by 39.85%. What was surprising, however, was a decline of 0.37% in its LCV sales.

Unlisted vehicle makers too showed similar trends. The sales volume of Toyota Kirloskar and General Motors declined by 24.31% and 21.82% respectively in December 2012. Ford grew by 42.23% and Hyundai declined by 2.48%. The overall sales of these entities were pushed higher as a result of strong exports. On the domestic front, while Ford grew by 9.02%, Hyundai declined by 9.55%. Highlighting the demand for UVs was Renault, whose sales grew 31 times in December 2012. This was pushed higher by the launch and success of its SUV – Duster, which constituted for 75.71% of the total sales.

Title: YoY Sales Volume Growth (%) For Two-Wheelers

Note: Honda only from April to November 2012

Not much changed on the two-wheeler front other than Bajaj Auto’s performance, which saw its sales volume grow by 12.51%. The sales of Hero MotoCorp and TVS continued to remain lacklustre, with a YoY change of 0.25% and -8.34% respectively. Honda, which has consistently outperformed its peers and shown magnificent growth even during troubled times, has not released its sales data yet. Having looked at the company’s past performance, we can safely assume that it has continued to perform well.

Thus, it is clear that the subdued sales trend over the last few months continues even now. Automobile manufacturers would now call off the discounts and raise prices, as they had hinted earlier. A revival in the industry is expected to be seen only with an improvement in the macroeconomic sentiment.