Wednesday, 2 March 2016

INDIA SALES ANALYSIS: FEBRUARY 2016

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The February 2016 sales numbers are out and carmakers with new models in their stable have benefited the most as consumers look to purchase a new set of wheels. Nonetheless, with the industry’s bellwether Maruti Suzuki India posting flat sales and the Union Budget imposing an infrastructure tax on all conventional fueled passenger vehicles, sales in 2016-17 will most likely to take the slow path as OEMs factor in the 1-4% cess in vehicles sticker price. It may be recollected that after clocking consistent growth for 14 months, passenger car sales had fallen 0.72% in January. It is likely that the decline story might be repeated in February but this can be confirmed only when all 17 carmakers reveal their sales numbers for last month.      On February 29, finance minister Arun Jaitley had, in view of growing pollution in India cities, proposed an infrastructure cess of 1% on small petrol, CNG and LPG-powered cars, 2.5% on small diesel vehicles and 4% on vehicles/SUVs with higher engine capacity. There is also a 1% luxury tax on vehicles which cost over Rs 10 lakh. This new tax will make cars costlier – expect hatchback prices to go up from Rs 5,000 to Rs 25,000, sedans from Rs 5,000 to Rs 20,000, SUVs from Rs 30,000 to over Rs 60,000. And, for vehicles priced above Rs 10 lakh, they just turned even more expensive. Captains of the automobile industry have expressed their disappointment over the proposed move and said it could be a deterrent to sales and the industry’s growth prospects. Maruti Suzuki India, the country’s largest carmaker, sold a total of 108,115 units in the domestic market, which constitutes only 0.2% year-on-year growth (February 2015: 107,892). It also exported 9,336 units last month which is a decline of 12.4% YoY (February 2015: 10,659).  February 2016 saw the company’s production at the Gurgaon and Manesar plants disrupted by the reservation agitation, causing a temporary suspension of production. The company says total production loss due to this issue was over 10,000 units. It is also likely that sales at Maruti showrooms in the Haryana belt were adversely affected during the agitation, which in turn reflected on overall numbers.   Saving the blushes for Maruti were sales of its utility vehicles and vans. While UVs (Gyosy, Ertiga, S-Cross) sold 8,484 units to notch 44.7% YoY growth (February 2015: 5,863), the vans (Moni and Eeco) sold 12,482 units, up 10.5% (February 2015:11,301). While the bread-and-butter entry level Alto and Wagon R hatchbacks sold 35,495 units, down 11.2% YoY (February 2015: 39,988), the compact car quintet of the Swift, Ritz, Dzire, Celerio and Baleno sold 42,970 units, up 0.4% (February 2015: 42,778). The premium Ciaz sold 5,162 units, down 4.6% (February 2015: 5,410). Also read: Maruti Alto drives past the 3 million sales landmark With the Union Budget 2016 imposing an infrastructure cess of 1% on small (not over 4 metres long and engine capacity not exceeding 1200cc) petrol, CNG and LPG-powered cars; 2.5% on diesel-engined cars (not over 4 metres long and not exceeding 1500cc); and 4% on higher-engine capacity (read above 1.5 litre), SUVs and bigger sedans (read above 4-metres long), Maruti Suzuki India is among the carmakers which will feel the pressure of slowing sales in the coming year.   Hyundai Motor India registered domestic sales of 40,716 units in February 2016 (February 2015: 37,305), a YoY growth of 9.1 percent. Commenting on the February sales, Rakesh Srivastava, senior vice-president (Sales & Marketing), Hyundai Motor India, said, “Hyundai’s domestic sales grew by 9.1% on the strength of strong performance of the Creta, Elite i20 and Grand despite logistic challenges of transportation of vehicles to North India and loss of many business days of dealership operations across Haryana.” Mahindra & Mahindra (M&M) has done well last month. Sales of its Passenger Vehicles segment (which includes UVs, cars and vans) comprised 23,718 units in February 2016 (February 2015: 18,817), a growth of 26 percent. Growing demand for Mahindra’s new models like the TUV300 and KUV100 have helped give a fillip to overall sales even as warhorses Scorpio and Bolero continue to provide the buffer with consistent demand.  According to Pravin Shah, president & chief executive (Automotive), M&M, “At Mahindra we are happy to have achieved  an overall growth of 16% during February 2016 on the back of strong performance by our range of passenger and commercial vehicles. The imposition of an infrastructure cess of 1-4% for passenger vehicles, as announced in the Union Budget, would increase prices of automotive products immediately. An increasing number of duties levied on automobiles is a cause of concern and we see the need for GST sooner than later. However we need to take it positively, in view of the strong emphasis laid on rural, agri and infrastructure plans for sound, sustainable and inclusive growth in the economy and to spur the much-needed demand." Meanwhile, Honda Cars India saw its sales declined 22.96% last month. The Japanese carmaker sold a total of 13,020 units in the domestic market (February 2015:16,902). Its best-seller for the month was the popular City sedan with 4,880 units, followed by the Amaze (4,069), Jazz (3,365), Brio (399), Mobilio (226) and the CR-V (81). Cumulative sales for the April 2015-February 2016 period are 174,629 units, which point to a YoY growth of 5% (April 2014-February 2015: 166,366). Toyota Kirloskar Motor sold 10,312 units in the domestic market last month, a decline of 12.62% YoY (February 2015: 11,802) growth. The carmaker says the Camry has seen an over 100% growth compared to sales in February 2015, with almost 90% attributed to the Camry Hybrid. Commenting on the monthly sales, N Raja, director and senior vice-president (Sales & Marketing), Toyota Kirloskar Motor, said, “Our monthly sales for February have picked up when compared to January 2016. However, the ban on registration of diesel vehicles in Delhi and NCR still continues to affect our sales as the Delhi and NCR market constitutes 8-10% of our market share which comprises of both the Innova and Fortuner. Moreover, the unrest in Haryana has further impacted our business in that region with dealerships being closed for more than a week.” Tata Motors’ passenger vehicles sales at 10,962 units were a decline of 20.37% (February 2015: 13,767). According to the company, sales of passenger cars were lower by 21% at 9,284 units (February 2015: 11,805) and UV sales declined by 14% at 1,678 units. For the 11-month period of April 2015-February 2016, cumulative sales of all passenger vehicles in the domestic market comprise 118,080 units, lower by 1% over the previous year. Renault India has registered domestic sales of 8,834 units in February 2016 as against 3,401 units in February 2015, recording a robust growth of 158 percent. The sharp increase is thanks to the game-changing Kwid. The Kwid, Autocar India’s Car of the Year 2016, continues to drive Renault’s expansion plans in India with customer orders crossing the 100,000 mark. The company has ramped up the production capacity at its Chennai plant to meet the growing demand for the product apart from expansion of its product, network and customer engagement. Renault has also substantially increased its sales and service network reach in India, from 14 sales and service facilities in mid-2011 to 205 currently, and is targeting to reach 240 facilities by the end of this year. Ford India sold a total of 5,483 vehicles, down 7.98% YoY (February 2015: 5,959). Anurag Mehrotra, executive director (Marketing, Sales and Service), said: “The Indian automotive industry continues to deal with weak consumer demand as witnessed by increasing levels of discounting in the market. The Union Budget should deliver on driving rural growth and infrastructure development. However, it lacks a clear roadmap for the automotive sector, which has for long been an engine of India's economic growth. Having said that, we continue to stay committed to our transformation plan which is based on product led innovation, communicating our strong cost of ownership proposition and delivering a differentiated customer experience.”  Two-wheeler sales see a correction Hero MotoCorp, India’s largest two-wheeler manufacturer, has reported sales of 550,992 units in February, marking a healthy growth of 13.66 percent (February 2015: 484,769). The company says it managed the production of as many units at its Gurgaon, Dharuhera (Haryana) and Neemrana (Rajasthan) plants despite the recent local agitation which disrupted life in the region. “The company made up for the lost days when despatches from these plants were affected due to the blockade of the national highways and other roads,” mentions the company release. Launching its new family scooter model under phases, Hero MotoCorp rolled out the Duet in eastern India, which helped it record increased sales of this model last month. The company says the Duet, along with the Maestro Edge, has received a positive response in many local markets, helping consolidate its position in the local scooter market. According to industry statistics, Hero MotoCorp sold 48,002 units and 24,239 units of the Maestro and Duet models respectively in January 2016 as both these models featured in the top four bestselling scooters for the month across domestic markets. Hero’s third scooter model, the Pleasure, which is targeted at young female riders, registered sales of 14,408 units in January. The company plans to launch its first in-house developed motorcycle – the Splendor iSmart 110 – which was displayed at the 2016 Auto Expo along with the Xtreme 200S, Duet electric scooter concept and a street-naked motorcycle concept, XF3R. The all-new Xtreme 200S, which will be powered by an in-house developed single-cylinder, 200cc engine, is expected to come in 2017. Reporting mild growth of 2 percent YoY, Honda Motorcycle & Scooter India (HMSI) has registered total sales of 369,227 units in February 2016, up 6.15% YoY (February 2015: 347,806). Of this, total domestic scooter sales comprised 229,332 units, which, according to the company, have grown by 10 percent YoY. On the cumulative front, the company has recorded total sales of 41,01,932 units between April 2015-February 2016, which marks an overall YoY growth of 1 percent inching closer to the 4.5 million unit sales mark for the ongoing fiscal. Of this number, total scooter sales for the 11-month period in the ongoing fiscal stood at 25,44,757 units, which, the company says, has registered 12 percent YoY growth. According to HMSI, it has maintained its domestic market share of 26 percent consistently through the 11-month period. The company has also received close to 900 bookings of its recently launched NAVI model(s). The deliveries for this crossover, which is manufactured at the Tapukara, Rajasthan plant, will begin in April 2016. Meanwhile, HMSI has started operations at its fourth plant in India, in Gujarat. A company release mentions that operations at the scooter-only plant are being ramped up on a daily basis. HMSI is yet to announce an official timeline for the start of local assembly operations of its globally popular twin-cylinder, 998cc adventure-touring motorcycle, Africa Twin. TVS Motor Company has reported a growth of 11.36% YoY for its total domestic two-wheeler sales of 183,199 units (February 2015: 164,508). Of this, 67,089 units comprised scooters (including exports), indicative of a growth of 18.2 percent YoY (February 2015: 56,750 units). The motorcycle portfolio sold 77,093 units including exports, and recorded a jump of 3.8 percent YoY (February 2015: 74,292 units). The latest addition in the Apache series, the oil-cooled, single-cylinder, 198cc Apache RTR 200 4V, is said to have been receiving a positive response from customers. The Apache series (now with four variants – RTR 200 4V, RTR 180 ABS, RTR 180 and RTR 160 – on offer), which sold a total of 20,858 units in January 2016, accounts for close to 25 percent of overall motorcycle sales for the company. India Yamaha Motor registered total domestic sales of 56,960 units in February, marking a healthy growth of 49.97 percent YoY (February 2015: 37,982). The rollout of new products like the 113cc Fascino, new colour variants of the 150cc YZF-R15 version 2.0, 150cc SZ-RR version 2.0, 125cc Saluto and twin-cylinder, 321cc YZF-R3 have kept up the sales momentum for the company during the ongoing fiscal. According to Roy Kurian, vice-president – sales & marketing, Yamaha Motor India Sales, “This consecutive growth of 50 percent in February too, is a result of Yamaha’s innovative customer contact programs and increasing reach. At Auto Expo 2016, there was a massive customer response to the new Ray Z-R scooter and MT-09 superbike." Talking to Autocar Professional, Kurian had mentioned that the company expects the Ray ZR to fetch sales of close to 10,000 units per month. While this will push scooter sales on one hand, the company is looking at expanding its dealership network to 650-700 by end-2016 from 500 in 2015. Meanwhile, Yamaha is learnt to have discontinued its motorcycles in the 100cc-110cc category, and the base variants of its FZ and Fazer models.  India M&HCV sales stay firmly glued to growth road Continuing their positive momentum, the commercial vehicle segment in India has sustained its strong growth in February 2016. The medium and heavy commercial vehicle (M&HCV) segment has maintained its strong double-digit growth curve over the past one-and-a-half year. In the latest Union Budget, the government’s impetus on stepping up spending on infrastructure, especially the national highway building programs, will further fuel growth in the CV segment, especially M&HCVs which will be major beneficiaries of the infrastructure spend. The infrastructure sector has seen a total Budget allotment of Rs 218,000 crore including Rs 97,000 crore to accelerate expansion of highways and rural roads.    Talking about CV growth prospects, R Ramakrishnan, senior vice-president, Commercial Vehicles, Product Strategy and Planning and Customer Value Creation, Tata Motors, said, “Things are improving for the commercial vehicle segment, though it is a slow recovery. M&HCVs continue to show good growth and it will probably remain that way. The emphasis on the mining and opening up of the infrastructure sector are all positives for the M&HCV sector. I think it will continue to show growth, although not in the same percentage because the base is increasing compared to last year but it will be heavy growth for M&HCVs.” As regards LCVs, he said the sector thus far has been negative and has shown growth only for the last couple of months. While growth is slated to come soon to LCVs, it will not be sudden or as large as for M&HCVs. Financiers are still cautious. “I think LCVs will take some time before they start recovering on larger volume or percentage growth. But they are definitely on the positive track and after another few months we will able to say confidently that the bottom is behind us. Right now, I will be a little guarded on LCVs,” said Ramakrishnan. CV MAJORS NOTCH HANDSOME GAINS With the major CV players revealing their February sales numbers, it is clear that M&HCVs are fueling their growth. Tata Motors has registered total sales of 30,570 units in February 2016, which is  up 15% (February 2015: 26,547 units). While it sold 14,872 M&HCVs, up 22% (February 2015: 12,190), it also sold 15,698 LCVs which marks a growth of 9.3% (February 2015: 14,357). Ashok Leyland has put up a sterling show. Its overall sales in February 2016 were up 25% at 13,403 units (February 2015: 10,762). Its M&HCV numbers have risen  31% with sales of 10,798 units (February 2015: 8,230) while LCVs have gained marginally, up 3%, with sales of 2,605 units (February 2015: 2,532 units). Mahindra Trucks & Buses’ M&HCV sales have risen 47% last month, the company selling 479 units (February 2015: 326 units). In the below 3.5-tonne GVW segment it has notched 15% growth with sales of 12,919 units (February 2015: 11,214 units). The above 3.5T GVW segment registered 15% growth with sales of 466 units (February 2015: 405 units). VE Commercial Vehicles sold 53.7% growth selling 4,264 units in the domestic market, (February 2015: 2,774 units).source
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