Auto Sales Low In May 2013

Monthly automobile sales figures have become rather predictable since the beginning of FY13. Consumer demand has been low and industrial production, construction and mining activity is subdued. All of these factors have been a result of unfavourable macroeconomic conditions, high interest rate and fuel prices, among others.

Although trends in interest rates and inflation have started to reverse, the effect is yet to be seen at the consumer level. In May 2013, automobile sales continued to remain subdued.

When sales volumes are considered in YoY terms on a percentage change basis, figures may appear flattish. However, it is important to remember that this is because of a low base, since the downward trend in the industry has been ongoing since more than a year now. If the number of units sold is to be considered, sales have seen no improvement.

Maruti Suzuki (MSIL), the country’s largest car maker sold 14.37% lesser vehicles in May 2013 when compared to May 2012. In all of FY13, sales were boosted by the success of Ertiga which was launched in April 2012. However, since volumes have now stabilised and the base has now factored this model in, the true sense of sales is coming forward.

Mahindra & Mahindra posted a decline of 1.2% in sales volumes in May 2013, over May 2012. The success of XUV500 had the company growing by leaps and bounds in FY13. However, since the base has now factored this in, sales growth seems flattish.

Among other automobile manufacturers Tata Motors and Hyundai had domestic sales volume grow by 0.3% and 6.29% respectively. At the same time, Toyota and Ford declined by 35.33% and 24.03% respectively.

The companies to see tremendous growth were General Motors, Renault and Honda. These companies witnessed YoY sales volume growth of 39.82%, 13x and 9.8% respectively. These were boosted by new launches that have brought about high amounts of success. The models behind this growth are Sail and Enjoy for General Motors, Duster for Renault and Amaze for Honda.

Although the trend in four-wheelers has turned more model-specific and companies have shifted their focus towards launching hot-selling models, the overall trend remains subdued. The total sales figures give a good picture of how there seems to be no improvement in volumes yet.

The trend has got its grip on two-wheelers as well. In May 2013, sales volumes of Bajaj Auto and TVS Motor declined by 3.65% and 6.17% respectively, on a yearly basis.

Although there seems to be no improvement in sales so far, a reversal in interest rates and inflation are positive signs. Moreover, the Meteorological Department has predicted a normal monsoon this year. All these factors are likely to result in an overall improvement in the industry in the coming months.