Futile February - Cars Down 25%, Trucks Down 35%

The recent numbers released by automobile manufacturers showed a slump in sales. Of all the four-wheeler manufacturers, the only ones to register growth over February 2012 were Renault, Hindustan Motors – Mitsubishi and Mahindra & Mahindra. The rest witnessed a decline in sales regardless of their heavy promotion.

SIAM (Society of Indian Automobile Manufacturers) released the data on cumulative sales figures for April 2012 to February 2013 earlier today. These figures have highlighted the gravity of the situation. Overall, the automobile sales grew by 3.69%. This growth was supported by Utility Vehicles (UV), Light Commercial Vehicles (LCV) and scooters, apart from which sales declined across most segments.

Of those hit, passenger cars and Medium and Heavy Commercial Vehicles (M&HCV) were the worst hit. In the month of February 2013, sales of these segments declined by 25.71% and 34.72% respectively. From April 2012 to February 2012, their sales have been lowered by 4.64% and 22.79% marking a heavy slowdown. With these figures, there’s no doubt that the 0-1% growth target of SIAM for passenger cars for FY13 is going to be missed by miles.

The slowdown has gripped two-wheelers as well. Overall, two-wheelers grew by a moderate 3.85% in April 2012 to February 2013 as compared to the corresponding period in the previous year. The growth seen in scooter sales has been responsible for this performance. In the period under review, scooter sales saw a growth of 16.19%. This has been extremely impressive as compared to the 2.18% growth in mopeds and 0.9% in motorcycles.

With only one month left for the financial year to end, it is now pretty obvious that all of SIAM’s targets (and revised targets) are going to be missed. The 5-7% target for motorcycles and 3-5% for Commercial Vehicles are far from the reality of 0.9% and -1.51% respectively. The severity of the situation has been escalating for the industry. Hopes for a revival lie in an improvement in the macroeconomic conditions. With a round of interest rate cuts happening recently and another one expected soon, the second half of 2013 might look brighter for the sector.