The Cars Consumers Bought In June

Since the beginning of FY13, automobile sales have been disappointing. The overall industry sales volumes were pushed a little higher on account of the outperformance of segments like Light Commercial Vehicles (LCV) and Utility Vehicles (UV). However, now that the base has been brought up, sales volumes are showing a truly negative trend. The only companies faring well are the ones which have seen certain product launches taking off in a big way.

Sales of Maruti Suzuki (MSIL), the country’s largest passenger vehicle player, were lower by 12.57% in June 2013, over June 2012. Weakness was seen across segments and models in the case of MSIL, including in the sale of UVs, which declined by 11.4%. Exports also caused a major drag, having declined by 43% on a yearly basis.

Tata Motors (TML) continued its downward journey. While its commercial vehicle sales were lower by 10.04% in June 2013, over June 2012, its passenger vehicle sales were lower by hefty 31.55%. TML has been facing issues in selling its passenger vehicle segment because of a product portfolio that has gaps and that has lacked new launches. If sales of TML’s in June 2013 are compared to sales in June 2011, volumes have been lower by as much as 46.33%.

The success of Mahindra & Mahindra’s (M&M) XUV500 and robust sales of other UVs propelled numbers in FY13. However, since the base is now higher, M&M’s sales witness a decline in June 2013. Total sales declined by 7.82% with passenger vehicle sales (UVs plus Verito) declining by 12.93%. However, M&M’s tractors saw strength. Total tractor sales grew by 25% in June 2013, over the corresponding period in the previous year.

Among unlisted entities, Hyundai saw flattish growth with sales volumes increasing by a mere 0.53% in June 2013. The performance of Toyota and General Motors was extremely disappointing with sales declining by 19.46% and 10.71% respectively.

The trend we have seen lately is of model-specific success driving the overall performance of a particular company. M&M’s XUV 500 and Renault’s Duster have been good examples of popular models brining about a considerable revival in sales. In June 2013, Renault’s Duster drove sales volumes higher by almost eight times as compared to previous year. Similarly, Honda’s sales increased by 248.59% because of the launch of Amaze and Ford’s sales by 14.01% because of the launch of EcoSport.

Two-wheeler sales showed a story no different as sales continued to remain low. In June 2013, Hero MotoCorp’s sales declined by 5.69% and Bajaj Auto’s by 14.32%. TVS Motor saw a decline of 2.71% on a yearly basis. Honda and Suzuki were the outperformers, sales volumes having increased by 11.09% and 46.23% respectively.

Overall, sales have been poor and signs of revival in the industry are nowhere to be seen. Monsoons have been good but macroeconomic trends continue to remain poor. Although demand from rural India is expected to be strong in Q3FY13, the direction of the industry will only take shape once the larger picture starts improving.