Auto Sector Continues To Struggle

Indian automobile manufacturers have posted a disappointing set of sales numbers for November 2013. For over a year now, the industry’s performance on the volumes front has been hurt by an increase in input costs and the depreciating rupee, along with weak consumer sentiment and low industrial activity. High inflation and high interest rates also continue to blight its numbers.

India’s largest car manufacturer, Maruti Suzuki (MSIL), sold a total of 92140 in November 2013 against 103200 units in last year November sales dipped by a 10.7%. The decline in exports weighed down the overall sales figures –.the total exports dipped by 46.2% to stand at 6630 in November 2013 against 12318 in the same period last year, and the domestic sales were down by 5.90%. In the super compact segment, DZire sale grew by 13.2%. The mini segment including Maruti 800, Alto, A-Star and Wagon R also saw good growth. Sales in the other segments, though, were subdued.

Tata Motors continued to go downhill in November. A stale product portfolio with gaps resulted in a decline of 42% to 10376 units from 18031 vehicles a year earlier in passenger vehicle sales. The company’s domestic sales slipped by over 40% to 37192 units compared to 62354 units in November last year. Exports too declined to 3671 units from 4146 units a year earlier.

Mahindra & Mahindra (M&M), which had been a consistent performer in the listed space so far, has also reported an 18% decline in total auto sales to 39255 units in November 2013 over November 2012. In November 2013, the UV and passenger car sales declined by 32%. Weakness was also seen in the sales of LCVs and three-wheelers, which went down by 8% and 15% respectively. M&M’s domestic sales dropped to 36261 units in November 2013, down 22% from November 2012. Exports jumped to 2994 units in November 2013, 116% over that in November 2012.

Among unlisted four-wheeler manufacturers, the only companies to post robust numbers were the ones that saw model-specific success. Sales of Honda grew by 151% on higher movement in the hatchback Brio (1712 units) and sedan Amaze (7598 units). Toyota’s numbers also grew by 12% in November 2013.The rest continued to struggle, with a decline seen in the sales volumes of companies like Hyundai (10.9%) and General Motors (14.14%).

The trend remained subdued in the case of two-wheelers as well. Bajaj Auto (BAL) was hit considerably, as the market for premium motorcycles in India declined. The company’s domestic sales declined by 6% to 385323 in November 2013 and exports were up by 9% at 138022. BAL’s motorcycle sales declined by 4% and three-wheeler sales were down 26%.

TVS Motor’s total sales declined by 5.77% in November 2013. The total two-wheeler sales declined 6.7% to 1 55 604 units from 166783 units, and motorcycle sales fell by 6.7%. On the other hand, a 26.18% growth was seen in exports. However, lower two-wheeler sales figures resulted in overall weakness.

Hero MotoCorp reported a 5.61 % rise in its total sales at 530530 units for November this year. In the same month last year, it had sold 502305 units.

Overall, the numbers clearly show that the auto sector continues to remain weak. Only structural improvement can be expected to help the industry.