Auto Sales Show No Improvement In April 2013

The sales volume figures of automobile manufacturers for the month of April 2013, announced on May 1, 2013, indicate a continuing slowdown in the industry. Demand has been severely hampered due to a weak sentiment, high interest rates and fuel prices over the last year. There seems to be no change in this. After the recent fuel price cut, the industry is now hoping for an interest rate cut in the RBI monetary policy review meet scheduled on May 3, 2013.

Maruti Suzuki (MSIL) had total sales declining by 3.10% in April 2013, on a yearly basis. This was, however, dragged down by a steep decline in exports which was to the extent of 33.28%. Domestic sales remained flat, having grown by 0.30% to 90,523 units.

Following the trend that has been existent since the last few months, Tata Motors witnessed tremendous weakness in its passenger vehicle sales. The sales volumes of passenger cars and utility vehicles/vans declined by 52.08% and 34.49% respectively in April 2013. However, an interesting trend was seen with respect to Medium & Heavy Commercial Vehicle (M&HCV). Their sales grew by 1.76% as compared to April 2012. M&HCV sales have been drastically lower since the last one year. April 2012 thus created a low base thus showing a flattish trend in volumes. Mind you, recovery is not what we are seeing here.

The slowdown in the industry caught Mahindra & Mahindra (M&M) too in April 2013. The company has witnessed an average monthly growth of 17.19% in the last one year. However, sales volumes grew by 1.76% in April 2013. In the press release, M&M said that it is extremely disappointed at the additional 3% excise duty on SUVs which has not been reversed in the Finance Bill.

Among unlisted players, Hyundai, Toyota Kirloskar and Ford Motors had sales volume decline by 7.6%, 37% and 24.03% respectively. At the same time, Renault saw a ten-fold rise in sales because of the success of Duster while Honda witnessed 20% growth with of the launch of Amaze. However, overall, volumes still look depressed.

The performance of two-wheelers too remained subdued. Sales volumes of Hero MotoCorp and Bajaj Auto declined by 10% each in April 2013, as compared to the corresponding month of the previous year. Sales of TVS Motor declined for yet another month by 5.30%, which is however lesser than the decline seen in the previous months. Overall, sales have shown no improvement for yet another month. We have, however, seen some easing in inflation with rates being cut and fuel prices brought down. The industry will definitely get an extra boost if rates are cut further tomorrow. 

Improvement in macroeconomic trends can save the day for the industry and that seems to be happening gradually. However, the monsoons and the passing on of these macro trends onto consumers will result in changes in the trend the industry is currently following.