February 2013 Proves Bleak For Auto Manufacturers

February 2013 turned out to be rather dismal for the automobile manufacturers. There was a heavy decline in volumes seen across segments, except in Utility Vehicles (UV) and Light Commercial Vehicles (LCV). There has not been any great improvement in domestic macroeconomic trends and thus in the demand for vehicles. Overall, all the three manufacturers of heavy vehicles (Renault, HM – Mitsubishi and M&M) reported YoY gains in volumes.

Maruti Suzuki’s total sales declined by 7.89% in February 2013 as compared to February 2012. The only strong area for the company was the sales of its Swift Dzire; 18316 units of the car were sold, thus showing a growth of 21.6%.  

Tata Motors seems to be the largest hit manufacturer lately. The performance of its Passenger Vehicles has been extremely poor, almost daunting. Sales of Passenger Vehicles declined by 69.42% in February 2013 as compared to the corresponding period in the previous year. The downturn in demand for Medium and Heavy Commercial Vehicles (M&HCV) continued, with sales lower by 45.02%. This led to the overall sales for Tata Motors declining by 32.65% on a YoY basis in February 2013.

In line with its standards, M&M continued to outperform relatively. Over a strong performance of Bolero, XUV 500 and Scorpio, the company reported a YoY growth of 10.99% in sales for the month of February 2013.

In the two-wheeler space, the performance was negative across the platter. In February 2013, listed companies like Hero MotoCorp, Bajaj Auto and TVS Motor witnessed a decline in the sales of more than 3% each, as compared to the previous year. Sales of Hero and TVS were lower by 4.24% and 3.70% respectively. The domestic demand slump also caught on to Bajaj, impacting its overall sales. Although exports for Bajaj grew by a strong 10.12%, the overall sales were lower by 3.31%.

Honda, however, continued to outperform, like it has always been doing. Its robust product portfolio led to Honda’s sales growing by 10.87% on a YoY basis. Although scooter sales declined by 2.51%, its motorcycle sales more than reversed the trend, having grown by 30.69%.

On the whole, the Indian automobile industry has witnessed poor sales. There are a few exceptions in terms of segments and players, but the cumulative situation is depressed. This trend is expected to continue for the next quarter with the lack of alteration in the macroeconomic scene. However, there are certain players like M&M that will continue to perform relatively better than the others and we thus expect their performance to be better.