July was a mixed bag for the automobile industry with companies such as Maruti Suzuki and Honda posting an increase in domestic car sales, while car makers, including Tata Motors and M&M, continued to struggle on the growth front. July also saw huge discount schemes being floated by the incumbents; however they failed to ignite the consumer fancy. We believe the concerns over fuel costs and expensive borrowing will continue to weigh on consumer interest for the remainder of this financial year, and likely outweigh the discounting schemes. Two wheelers sales too continue to remain strained with only two of the top four manufacturers in India reporting a growth in numbers.
Outlook
With the forecast of the industry growth dropping well below the expected targets, we believe that the plunge in sales will continue unless there are some drastic measures taken by the government and car companies to revive sales. The outlook reflects the structural weakness in the passenger vehicle segment in terms of high capacity additions and intensifying competition which may potentially become entrenched in the industry structure. On the CV front, we strongly believe some measures like scrapping of old trucks, assured driver supply and GST will benefit the trucking industry.
Maruti Suzuki India
Dzire pulled Maruti Suzuki out of the blues…
Maruti heaved a sigh of relief as July was the first month in which it posted positive numbers since the beginning of 2013-14. It sold 75,145 units domestically, up 5.8 percent over the 71,024 units sold in July 2012.The Dzire managed to sell 15,249 units, up 33 percent over the 11,413 units sold in July 2012.
In the small car segment comprising the Alto, A-star, M800 and WagonR, it sold 33,587 units, an increase of 15 percent over the year-earlier month, while the Swift, Estilo and Ritz managed 13,882 units, down 11.9 percent from 15,759 units sold in July 2012. On the export front, July numbers were down 27 percent with 8,154 units sold as against 11,210 units sold in July 2012. This led to a growth of 1.3 percent in total sales to 83,299 units in July 2013 compared with 82,234 units in July 2012. The company's midsized sedan SX4's sales declined by 52.8 percent to 322 units. Luxury sedan Kizashi witnessed no buyer last month compared to sales of 2 units in July 2012.
Mahindra and Mahindra
Farm equipment sector too failed to sustain overall growth…
Pulled down by de-growth on the exports front (-39 percent), Mahindra & Mahindra cars sales sharply dropped by 21.17 percent at 37,096 units as against 47,059 units in July'12. On the domestic front, M&M sales stood at 34,490 units as against 42,799 units in the same month of last year, down 19.41 percent.While total sales of passenger vehicles (Scorpio, XUV500, Xylo, Bolero and Verito) stood at 15,530 units as against 22,011 units in July, 2012, down 29.44 percent. Over the same period, commercial vehicles (Gio and Maxximo mini-trucks) registered 6.45 percent growth, at 13,740 units.
The main highlight remained the strong performance in the Farm-equipment sector, where sales climbed 12 percent to 18,469 units as against 16,521 units in July 2012. Domestic tractor sales were up 15 percent at 17,771 units as against 15,495 units in the same month last year. Exports were, however, down by 32 percent to 698 units as against 1,026 units in July last year. Satisfactory monsoons and improvements in Kharif crop is what has resulted in overall improvement with the company expecting further increase in sales in the months ahead. We believe revival in agri-production will provide greater impetus to the economy amidst the overall slowdown.
Tata Motors
Lack luster demand
Backed by sluggish demand from M&HCV and PV segment, Tata Motors continued to witness a steep decline of 30 percent YoY to 51,468 units. Cumulative sales (including exports) for the company for the fiscal were 204,659 units. Total passenger vehicle sales in the domestic market stood at 10,824 units in July, down 58.75 percent from 26,240 units in the same month last year. In the commercial vehicles segment, the company's sales dropped by 14.2 percent to 36,367 units in the domestic market during the month under review compared to 42,387 units in the corresponding period last year. On the export front, Tata Motors witnessed sales of 4,277 units in July 2013, dropped by 12.06 percent. While over the same period, cumulative sales from exports for the fiscal were 15,712 units.
Ashok Leyland
De-growth!
Reflecting the continuing pain in the economy, commercial vehicle and light commercial vehicle manufacturer Ashok Leyland Ltd has posted decline in sales in both the segments during July this year compared to the corresponding month during last year. Sales of Dost declined 12 percent to 2,480 units against 2,803 units in July last year. The total sales declined 11 percent to 8,739 vehicles (9,785 units). SCV sales registered a 7 percent decline to 9,304 units during this period compared to 10,051 units last year. The total sales fell 18 percent to 30,463 vehicles (37,272).
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