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Automobiles: Overall market demand is suppressed

Eastern Financiers | 06 Sep, 2012  | Follow Author | Add to my Favourites 
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The sharp slowdown in Indian economy coupled with drop in rural income and weak monsoons have hit auto sales, that marked some bit of recuperation during the preceding month of July 2012 attributed by the low base effect and the optimism ahead of the festive season.

Bajaj Auto persisted to stage murky performance for yet another month marking de-growth of 9.88% amid sagging economic scenario for the sector that is lingering amid sluggish demand. Bajaj Auto nevertheless said that they are satisfied to hold onto sales volumes on monthly basis and expects the September quarter to be tough for all the two-wheeler companies and believes that the domestic motorcycle market is in decline mode. Mr. Rajiv Bajaj, MD of Bajaj moved on to say that, “Normalcy has been restored in the export markets of Sri Lanka and Egypt. Three-wheeler sales figures in Sri Lanka has considerably picked up from 3000 units earlier to 7500 units.” Besides, Bajaj expects its inventory level to be at 2.20 lakh units and at present it is higher than expected, Bajaj said. Bajaj Auto reported sales of 344906 units in August 2012 against sales of 382739 units in the same month last fiscal. Bajaj witnessed de-growth of sales across all the segments.

Cuffed by almost a month long lock-out at its Manesar plant that manufactures its largest-selling cars such as Swift and DZire, Maruti Suzuki India reported sharp plunge in sales for the month of August tripping away by 40.76%. Maruti Suzuki's diesel versions of Swift and DZire are among the most selling cars in the industry. The sales however anticipated to be slither for the month following the violence at the plant. Suzuki witnessed slip in sales across all its segments except for the utility division that includes the Gypsy, Grand Vitara and the newly launched Ertiga. Suzuki reported total sales of 54154 units in August 2012 against 91422 units in the same month last fiscal.

Hero MotoCorp that marked marginal de-growth during the preceding month of July 2012 amid challenging environment where erratic monsoon rains, rising petrol prices and high interest rates affected retail sales in the rural and urban areas — aggravated during the month of August marking slowdown in sales, with sales of below 5 lakh plus units at 443801 units against 503564 units being sold in August last fiscal, observing de-growth of 11.88%. Hero MotoCorp however clocked sales of five lakh plus units for eleven consecutive months till June 2012 before slipping below that level last month that marked sales of 484217 units. India's second largest commercial vehicle maker Ashok Leyland reported 30.42% year-on-year rise in August sales at 9432 units, as continued strong demand for its light truck Dost helped cushion the bumpy ride of heavy trucks. The Hinduja group company sold 2835 units of the Dost SCV (small commercial vehicle), which was launched in September last year. Excluding the Dost, Ashok Leyland's CV sales declined 8.60% to 6597 units against last August.

India’s leading sports utility vehicle maker, Mahindra & Mahindra that has been outperforming the peer auto makers amidst restrained outlook of the economy and the automobile sector endured to report stout performance for yet another month embarking on growth of 21.63% during the month of August 2012 and marked growth of 22.09% during the April-August period of FY13 with sales of 218924 units being sold in the five months period of fiscal 2013 equated to 179314 units in the same period last fiscal. The company sold 45836 units during the month of August this fiscal against 37684 units in August 2011. However, the farm equipment sector of thMahindra & Mahindra continued to clock de-growth of 17.30% marking sales of 13234 units as against 16003 units being sold in August last year. The overall growth of Mahindra & Mahindra, including the farm equipment sector parked at 10.03% with total sales of 59070 units in August 2012 equated to 53687 units sold in August 2011.

Aided by the surge in Tata Nano by over five times, the passanger vehicle segment of Tata Motors impelled by a healthy 32.57% which resulted in an overall trek-up of 12% in total sales of Tata Motors. India’s largest commercial vehicle manufacturer continued to register stout performance for August 2012 after clocking strong growth of 15.26% during July 2012. Total sales of the company parked at 71826 units against 64078 units being sold in August last year. Compared to the preceding month of July 2012, in which it sold 73491 units, sales stooped down 2.27%.

Escorted by murky performance across all its segments, TVS Motors Company persisted to report down-tick in sales for the month of August 2012 by 20.65% after marking de-growth in the consecutive preceding months of May, June and July to the tune of 5.33%, 7.54% and 15.11% respectively. TVS witnessed dismal sales of 154647 units this August against sales of 194898 units in August 2011. Sales when compared to the preceding month of July 2012, slipped down 4.1% with 161255 units being sold during the month.


Amid tough market conditions the auto sector endured to exhibit restrained set of numerals for the month of August. The overall market demand is suppressed due to the general inflationary trend, high fuel prices and escalated interest costs. The auto industry is expected to remain subdued in the current fiscal as per the Society of Indian Automobile Manufacturers (SIAM) that has curtailed its car sales growth target to 9% from its earlier targeted growth of 10-12%, crediting elevated fuel prices and dear finance rates on new purchases as rationales behind the target set. However, amidst all the trepidations there might be some bit of recuperation at the instigation of the festive season post the month of September 2012.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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