Discounts drive up India car sales in July, mixed performance for two-wheelers

August 2, 2012: After a tepid first quarter in fiscal 2012-13, July 2012 sales numbers have brought some cheer to automakers. Thanks to a flurry of discounts on a number of cars and utility vehicles, ahead of the festive season, most OEMs have reported good sales increases in July.

Maruti Suzuki, whose labour strife-stricken Manesar plant is under a lockout, reported domestic sales of 71,024 units in July compared to 66,504 units in July 2011, an increase of 6.8 percent. The popular Dzire saloon sold 11,413 units and was the single largest contributor to Maruti’s sales in the month, followed by the equally popular Swift hatchback. However, going forward, Dzire(and Maruti) sales will be impacted by the Manesar morass, which is where the saloon is manufactured and from where most of the diesel models roll out. The Ertiga MPV was also a strong contributor to July sales.

Tata Motors, with 26,240 units sold in July, reported a 52.6 percent growth, thanks to 68 percent higher sales of the Nano and a 59 percent growth in UV sales. July sales clearly will be welcome news for the company which, in June 2012, had posted 22 percent lower sales for its passenger cars (17,244 units). Hyundai Motor India notched a 7.6 percent increase in its July sales -- 27,585 units versus 25,642 units a year ago. Segment-wise cumulative sales were A2 segment 44,274 units (Eon, Santro, i10, i20); A3 segment 8,454 units (Accent and Verna); A5 segment 32 units (Sonata); and SUVs, 85 units (Santa Fe).

Commenting on the numbers, RakeshSrivastava, vice-president, national sales, HMIL, said: “The overall market demand is suppressed due to general inflationary trend, high fuel prices and interest rates. Unless any major triggers get activated, market sentiment is not expected to improve very much.”On the export front, sales were up for HMIL: 5.1 percent from 24,024 units in July 2011 to 25,260 units last month.

Meanwhile, Mahindra & Mahindra continues to make the most of the ever-growing demand for diesel vehicles. The company announced a 27 percent increase (UVs and Verito) at 22,011 units sold compared to 17,312 units in July 2011.Overall domestic sales for M&M, including CVs and three-wheelers comprised 47,059 units in July 2012, a 19 percent rise over the 39,633 units in July 2011. Speaking on the performance, Pravin Shah, chief executive, Automotive Division, M&M, said: “We are happy to have achieved a growth of 19 percent during July 2012 in spite of difficult and uncertain market conditions continuing. Incidentally, July 2012 is the second highest monthly sales for us. The auto industry needs to be concerned about slower economic expansion and consumer sentiments which are not so positive. A cut in interest rates would have helped lower the cost of manufacturing and products, thereby improving industry confidence.”

Toyota Kirloskar Motor saw its sales rise by seven percent to 14,574 units in July 2012, compared to 13,592 units in the corresponding month last year. While the Innovaclocked 39 percent growth with 6,678 units sold (4,816 units in July 2011), the Fortuner SUV recorded 24 percent growth with sales of 1,316 units (1,060 units in July 2011). Meanwhile, the Etios series sold 6,024 units as compared to 6,646 units in July 2011, and the Corolla Altis sold 540 units last month.

Ford India sold 6,236 units in the domestic market in July, down nearly 17 percent over the 7,504 vehicles in the same month last year.During July, Ford India also commissioned its expanded engine plant in Chennai, increasing annual engine production capacity 36 percent to 340,000, which will help feed the surging demand for diesel powertrains in India and export markets. The new facility can produce an additional 80,000 diesel engines annually.

The company also introduced its Classic Titanium variant with nine new best-in-class features in July.“We will continue to refresh our product line-up with affordable, yet technologically smart offerings such as the Classic Titanium, bringing our customers safe, reliable and fun-to-drive vehicles that offer amazing value and comfort,” said Michael Boneham, president and MD, Ford India.“We believe the difficult market situation will ultimately recede in the long run and we are confident of meeting the increased demand for cars in the festive period with our expanded capacity in engines,” Boneham added. Meanwhile, Ford India’s exports are up 13 percent this year, with 14,335 units shipped since January.

Nissan Motor India sold 3,481 units in July, the Sunny saloon leading the numbers with 2,436 units while the Micra hatchback sold 1,028 units. The company says it is on track to launch the Evalia MPV later this year.

Mixed performance for two-wheeler makers

Hero MotoCorp Ltd (HMCL) reported flat sales of 484,217 units in July 2012, compared to 491,036 units in July 2011. Commenting on the performance, Anil Dua, senior vice-president (marketing & sales), said, "The two-wheeler industry has been experiencing sluggish growth for the past few months. We are strengthening our brand in the midst of a challenging environment where a patchy monsoon, rising petrol prices and high interest rates have been affecting retail sales in both rural and urban markets.”

The company had registered its highest ever quarterly sales of 16,42,292 two-wheelers in the first quarter this fiscal, fuelled by two consecutive months of highest-ever monthly sales in April (551,557) and May (556,644 ). June sales comprised 534,091 units.

HMCL recently announced the setting up a Global Parts Centre (GPC) at Neemrana in Rajasthan. The GPC, which is expected to be operational in the third quarter of the next financial year (2013-14), will be set up with an initial investment of Rs 160 crore and will employ 400 personnel.

Honda Motorcycle & Scooter India (HMSI), which has targeted a No 2 spot in the industry, continued to post handsome sales increases. Its July 2012 performance saw it notch a 56.9 percent increase with total sales of 239,094 units comprising 109,493 motorcycles (up 80 percent) and 129,601 scooters (up 41 percent).

TVS Motor Co, which recorded negative growth of 12 percent, has reported domestic sales of 140,822 units for July 2012 as against 160,348 units in July 2011. These comprised 53,355 motorcycles (70,170 units in July 2011), while scooters registered sales of 40,895 units (49,333 units in July 2011). Exports too were down, with two-wheeler numbers being 17,132 units in comparison with 26,324 units in July 2011.

Suzuki Motorcycle India registered a 48.8 percent increase in its July 2012 sales figures as compared to July 2011. It sold 40,295 units in July 2012 as compared with 27,088 units in July 2011.Atul Gupta, vice-president, sales and marketing, said: “We have received a good response from the market for all our products. The newly launched Hayate mass market motorcycle has also received a tremendous response.”

July 2012’s sales, to some extent bring cheer to automakers. But all said and done, vehicle manufacturers are keeping their fingers crossed. Challenging market conditions continue unabated in the automobile market. A poor monsoon, high fuel and interest rates and a subdued consumer sentiment are not the best combination for growth. SIAM too last month had revised its growth projections for the passenger car industry from the earlier 10-12 percent to 9-11 percent.