Auto Sales: Yet In The Slow Lane

Auto sales have once again disappointed. Numbers for the month of August 2013 too have been lousy. A slowdown in the economy (with the GDP growth coming in at just about 4.5%), high interest rates and consistently rising fuel prices are factors that have continued to hurt the prospects of the sector.

None of the companies, other than Maruti Suzuki was able to post a decent performance in the month that went by. On a yearly basis, the company has reported a 51% growth in its domestic sales which stood at 76018 units, whereas, exports jumped up by a good 180% to 11305 units. The passenger car segment witnessed a growth of 101% to 63499 units in August 2013 against 31653 units during the same period last year. This performance which is quite good comes on the back of a low-base effect. Violence at the Manesar Plant in Haryana had resulted in a production pause during the same period last year.

Tata Motors once again reported disappointing sales figures. Domestic sales of the company declined by 34% to 44717 units, whereas as exports rose by 11% on a Year-on-Year basis. Sales of M&HCV (Medium and Heavy commercial vehicles) dropped by 44% to 8249 units, while LCV (Light commercial Vehicle) sales dipped by 18% and stood at 24904 units. The passenger Vechicle segment consisting of passenger cars and utility vehicle saw a 48% decline in sales to 11564 units.

If the month wasn’t very great for the Tata’s it was even worse for Mahindra & Mahindra. Both, domestic as well as export sales were under pressure on a yearly basis. Domestic sales slumped by 17% and stood at 35159 units whereas exports went down by 9% to 2738 units. Its main revenue generating segment; passenger vehicles, which includes Utility vehicles and the Verrito, has reported  a decline of 28% in sales to 15821 units. M&HCVs and LCVs also suffered with sales having declined by 35% to 471 units and 4% to 13718 units respectively. Moreover, sales of three wheeler vehicles dipped by 11% and stood at 4303 units during the same duration. Growth was observed in the farm equipment segment where domestic sales of tractors improved by 9% to 13543 unit but exports went down by 27% and stood at 615 units on.

Unlisted companies like Hyundai have reported a flattish trend in domestic sales, while Ford reported a sales growth of 2% on a YoY basis. Toyota reported a decline of 14% in its domestic sales whereas, overall sales of Resault dipped by 4.6%.

Even two-wheeler companies failed to report encouraging results in the elapsed month. Hero Motocorp, managed a modest growth in total sales of 4% having sold a total of 459996 units in August 2013 as against 443801 units it sold in August 2012.

Bajaj Auto suffered despite its exports having gone up by 10% to 1444160 units. This was primarily on account of the domestic sales having declined by 21% to 168028 units. A further breakup of the numbers shows that motorcycle and three-wheeler sales have dipped by 8% and 17% respectively.

TVS Motors' on the other hand saw its exports increase by 53% wherein motorcycle and three-wheeler segments have helped sales in each of them having gone up by 14% to 61187 units and 80% to 7063 units respectively. However a decline in overall domestic sales by 6% to 127095 and a drop in scooter sales by 4% has hampered the total sales  performance of the company.

On a yearly basis, Yamaha has posted a 67% rise in its total sales to 60996 units while domestic sales have improved from 27297 units in August 2012 to 42990 units in August 2013. Sales of Honda Motorcycle and Scooters rose by 39%.

The Current scenario for the automotive industry is rather gloomy. We expect a hike in demand from rural areas going forward, riding on the good monsoon that we have seen this year. Even the festive season is ahead would help in fostering demand higher.