Automobile industry's Big Three post sales decline in August

Domestic car sales continued their slide in August on weak demand and rising interest rates. All the big three car makers—Maruti Suzuki, Hyundai Motor and Tata Motors —saw an alarming decline in domestic sales even though smaller car makers continued to grow.

Maruti’s continuing labour trouble at Manesar affected production; the company itself had also lowered production earlier in the month on weak demand. So domestic sales decline in August was almost 17% at 77,086 units (92,674 units).

Srinivas Rao and Amyn Pirani, analysts with Deutsche Bank, said that the year-to-date decline in total sales at Maruti “continue to lag our forecasts. The volumes are weak even after considering the adverse impact of disruption in production at the company’s Manesar plant.....Our FY12E domestic volume forecast of 1.2 million (6.1% year-on-year growth) implies a growth rate of 14.3% over the next seven months against a 7.4% decline in year-to-date volumes.”

Hyundai reported almost 7% fall in domestic sales at 26,677 units (28,601 units) even as exports continued to grow. Arvind Saxena, director (marketing and sales), said “the market continues to be tough and there are no signs of recovery in the immediate future.”

Then, factory dispatches of the Tata Nano fell 85% to 1,202 units. Sales of other Tata cars were down 33% to 16,829 units. Despite dismal performance by the big three, analysts are still hopeful of a seasonal sales spurt from September due to several festivals, some of which are considered auspicious for new purchases.

Toyota Kirloskar Motors sold 84% more vehicles in August at 11,693 units, mainly on strong demand for its Etios and Liva models. Ford India reported 9% more sales (local plus exports) at 8,914 units (8,172 units); General Motors was up 14% — driven by the success of Beat Diesel — at 9,050 units (7,941 units).

Volkswagen sold 6,091 units, 72% more than 3,531 units sold in the same month last year. Even Honda Siel Cars India, which has been witnessing declining sales for the last several months on production cutbacks, reported 25% growth this August at 6,907 units (5,518 units), fuelled by the lower-priced Honda City.

Two-wheeler sales continued to be on a roll. Hero MotoCorp sold 19% more bikes and scooters at 503,654 units (424,617 units). Bajaj Auto reported highest even motorcycle sales and year-on-year growth of 17% growth this August at 338,054 units (289,176 units).