Vehicle Sales – Disastrous Start to 2014

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Calendar year 2014 hasn’t started off on a good note with Passenger Vehicle dispatches in January down 9.34% over prior year. At 219,809 units, dispatches in January 2014 were 22,651 units short of Jan 2013 volumes of 242,460 units.

Not only that, Jan 2014 has undone the growth of the last three years as volumes were 13.5% down from Jan 2012 dispatches of 254,172 units and even 5.1% down from Jan 2011 numbers of 231,584 units.  

From this month onwards, we will analyse monthly sales numbers as outputted by SIAM. Every month, we will analyse the numbers, with our own twist, as soon as SIAM comes out with the data around the 10th of the month. This is an additional feature on IAR and not a regular analysis, which means that we would be back again on Wednesday morning with another analysis on the Indian Auto Industry. – Editor

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Passenger Vehicle Sales-Januarys

Jan 2014 dispatches indicate that the industry is so depressed that it has undone three years of growth

Monthly sales data as released by the Society of Indian Automotive Manufacturers (SIAM) every month in India actually represents dispatch data at the OEM end and not actual retail sales data. In many cases, temporary inventory building affects the quality of data.

Segments

Breaking the dispatches down to segment levels, Passenger car volumes at 160,289 units in January 2014 were 7.6% down from Jan 2013 numbers of 173,449 units; 18.2% down from Jan 2012 dispatches of 196,013 units and 12.3% down from Jan 2011 volume of 182,852 units.

The downturn has undone the growth of last three years in Passenger Cars

Not a very Happy New Year to anyone, indicate January 2014 Passenger Car dispatches 

On the Utility Vehicles (UV) side, things aren’t too bad due to new product introductions maintaining the momentum of the segment. Dispatches in January 2014 came in at 45,941 units, a fall of 6.3% from Jan 2013 levels of 49,015 units, but 31.8% up from Jan 2012 dispatches of 34,848 units and 52.5% up from Jan 2011 volumes of 30,115 units.

UV sales look better than Passenger Cars mostly due to new launches

UV sales look better than Passenger Cars mostly due to new launches

Dispatches in the UV segment have been helped by the successes of the Renault Duster, Nissan Terrano and Ford EcoSport. The three combined accounted for 10,221 units in Jan 2014. Arguably, customers have migrated from Passenger Cars to these mini SUVs and to do a competent apples-to-apples comparison, we may exclude the entire volume of three models from the UV dispatch volumes.

Remove the new launches and the UV sales picture is shattered

Remove the new launches and the UV sales picture is shattered

Doing that reduces the effective sales volume to 35,720 units. The comparable volumes in Jan 2013 were 45,461 units (Duster sales were 3554 units in Jan 2013, the other two models did not exist). This represents a 21.4% decline in UV dispatches in Jan 2014 on a year-on-year basis.

However, things have turned quite bad for the Vans segment as January 2014 volumes of 13,579 units marked a decline of 32% over Jan 2013 dispatches of 19,996 units, a 36% decline from Jan 2012 levels of 21,252 units and a 27% decline over Jan 2011 dispatches of 18,617 units. In fact, so bad was Jan 2014 that volume were even 12.8% below the Jan 2010 recorded dispatches of 15,580 units.

Small businesses must be hurting looking at Jan 2014 Van dispatches

Small businesses must be hurting looking at Jan 2014 Van dispatches

A steep fall in the Vans segment (mostly commercial use) and the Utility Vehicles segment (60%-70% commercial use, excluding EcoSport / Duster / Terrano) indicates that small businesses are hurting. This is an indicator that the economic rot has now reached the levels where it is affecting small enterprises and a recovery would be many months away.

Significant Models

Looking at the data for some specific models, there are some surprises. The Tata Nano is one. After months of continuously falling numbers, the Nano has shown a near 50% jump in dispatches. At 2250 units, this marks an increase of 746 units over January 2013 (1504 units).

Nano's jump in volumes may be due to stock building by dealers of the Twist variant

Nano’s jump in volumes may be due to stock building by dealers of the Twist variant

However, volumes in Jan 2014 still do not compare favorably with Jan 2012 (7723 units), Jan 2011 (6703 units) or even Jan 2010 (4001 units) sales.

The sharp rise in Nano dispatches in January 2014 coincides with the recent launch of the Nano Twist variant and the company’s efforts to change the car’s image to make it more appealing to the youth. We would be keenly watching the numbers over the next few months, as the numbers spurt in Jan 2014 may be an inventory building of the Nano Twist version.

Heavy Honda City dispatches indicate stock building by the dealers for the new generation model

Heavy Honda City dispatches indicate stock building by the dealers for the new generation model

Temporary inventory build-up may also have happened for the Honda City, which, with the launch of the new generation in January 2014, may have seen dealers building stocks at their end to deal with the customer rush in anticipation of an attractively priced, feature rich, new generation model. At 7184 units, City dispatches in January 2014 were 147% more than that in January 2013 and the highest for any January till date.

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Mini / Compact Segments

In the Mini and Compact segments, Maruti witnessed a 10.5% fall in dispatches as numbers came in at 63,038 units. This is also 18.9% below Jan 2012 dispatches of 77,792 units and even 15.2% below Jan 2011 dispatches of 74,355 units. Dispatches are expected to shoot up a bit in Feb 2014 as dealers stock the Celerio.

Hyundai fared slightly better with volumes of 29,186 units, 2.3% more than 28,516 units the company shipped to the dealers in January 2013. Dispatches in Jan 2014 were also 0.7% more than those in Jan 2012 (28,982 units) and 7.63% more than the 27,115 units the company shipped in Jan 2011.

The Mini / Compact segment is struggling with lost volumes

(Click to Enlarge) The Mini / Compact segment is struggling with lost volumes

However, Hyundai’s better dispatches and flat sales performance also reveals that the i10 Grand has been able to only preserve volumes for the company, not improve it significantly. With the i10 (old generation) and i10 Grand (new generation i10) running in parallel, the company would have hoped for about 5000-6000 units per month gain in sales in the Mini / Compact segment. However, the slowdown means that the Grand has only been able to ensure that Hyundai does not lose sales volumes.

For Ford, Figo dispatches have dropped severely, mostly due to lifecycle issues as well as cannibalization by the EcoSport. In fact, the problem that Ford faces is often the one that every carmaker barring the top 2-3 face in the Indian market, which is to increase the aggregate sales for the brand. As it happens, a hot new product ends up eating up the incumbents in the showroom, adding barely 10%-20% to the total company volumes. With time, and the onset of arthritis, the 10%-20% is lost as well and the overall volumes stay stagnant.

Ford shipped 2354 Figos in Jan 2014, a 55% decline over Jan 2013 dispatches of 5240 units, 68.6% decline from Jan 2012 volumes of 7508 units and a 72.7% decline from Jan 2011 numbers of 8618 units.

A similar problem plagues GM, which finds it tough to increase overall volumes even though new products are often received well. GM dispatched 2498 hatchbacks to dealers in Jan 2014, a 47.9% fall from Jan 2013 volumes of 4799 units and 55.6% fall from Jan 2012 numbers. Further, GM volumes were 64% down from Jan 2011.

A similar comparison can be drawn with dispatch numbers from Volkswagen, Renault-Nissan, Toyota and Tata.

The only manufacturers in the Mini / Compact segment who had a positive Jan 2014 wee Honda because of the Amaze and a resurgent Fiat, which had fallen so far last year that it couldn’t fall any further.

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Super Compact segment

However, the situation is quite contrasting in the super compact segment where Maruti seems to be having no problems in maintaining the momentum of the D’Zire even in the face of the Amaze.

Even Toyota manages to maintain its volumes over last year with only a 3.5% fall over Jan 2013 dispatches.

Mid-Size and everything beyond

In a depressed market, the premium end of the market becomes hugely dependent on the freshness of the product and that is the case with the Mid-Size segment and all other segments above that. Only models like the Honda City and Skoda Octavia are left standing as everything else is incapacitated by the great depression.

Utility Vehicles

GM has another cannibalization problem with the Chevrolet Enjoy MPV. The MPV has been well received in the market with most buyers being fleet operators, who have happily stopped buying Chevrolet Taveras. On a net basis, the increment in

Chevrolet Enjoy boosts GM UV volumes but cannibalises Tavera

Chevrolet Enjoy boosts GM UV volumes but cannibalises Tavera

sales is not much, if at all. GM shipped 2199 UVs in Jan 2014, a 28.67% growth over Jan 2013 dispatches.

However, the Tavera+Enjoy was the only silver lining in the Utility Vehicles segment as every other model saw a decline in dispatches in Jan 2014. However, the overall volumes are sustained to an extent by new introductions like the EcoSport and Terrano.

Special Issues – The Collapse of the Soft-Top Vans

Soft-Top vans like the Ace Magic are normally used as shared cabs in rural and semi-urban areas. They help people commute on a daily basis between small towns and their suburban areas and also between villages a few miles apart.

We are witnessing a sharp decline in dispatches of these Soft-Top cabs in Jan 2014. Such a decline could mean that the rural economy is under pressure so much that cab operators are not replacing their fleet. A lack of a scrappage scheme or roadworthiness certificate requirements means that operators can keep plying these vehicles till they fall apart.

Soft Top Vans

A collapse of Soft Top van dispatches indicates a softening rural economy

Another, and even graver, reason for the drastic fall in numbers could be that the rural market is already reaching some kind of saturation and manufacturers are unable to penetrate further.

A lack of new product initiative and / or significant product enhancements to the existing line-up also mean that fleet operators running these soft-top vans have no incentive to buy new vehicles.

Net dispatches in the Soft-Top vans segment in Jan 2014 were 3373 units. This was 66.9% below Jan 2013 dispatches and 57.9% down from Jan 2012 volumes. In fact, this was the lowest volume ever for the segment since Jan 2009.

A similar trend can be seen in the LCV segment for trucks below 2T GVW. The Tata Ace and its equivalents saw dispatches of 12,874 units in jan 2014. This was 29% below Jan 2013 dispatches of 18,140 units and 37.3% down from Jan 2012 dispatches of 20,543 units. Again, the Jan 2014 volumes were the lowest since Jan 2009.

Tata Ace (And equivalent) truck dispatches are down significantly in Jan 2014 and indicates pressure on small businesses

Tata Ace (And equivalent) truck dispatches are down significantly in Jan 2014 and indicates pressure on small businesses

However, the sub-two-tonne segment is not the only one bleeding. The entire commercial vehicles segment is bleeding heavily. M&HCVs Good Carriers dispatches were all of 13,073 units in Jan 2014. This was 19.8% down from Jan 2013 volumes of 16,296 units and less than half of Jan 2012 numbers of 26,647 units. Again, volumes in Jan 2014 were the lowest for any January since Jan 2009.

However, the Buses segment, supported by government dole through state run schemes like JNNRUM, is still relatively resilient. Dispatches were 2696 units, hardly 100 short of Jan 2013 levels.

Two Wheelers Rejoice

The real growth story continues with the two wheeler segment which saw net dispatches of 1.31 million units, a 8.8% jump over Jan 2013 dispatches of 1.2 million units. This is a positive start to the year for the segment and an indication that there is hope at the bottom of the pyramid yet.

 

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One Response

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  1. SATYADEV SHARMA
    Mar 28, 2016 - 03:53 PM

    NEED DETAILED SALES ANALYSIS OF COMMERCIAL, PASSENGER SEGMENT VEHICLES FOR FINANCIAL YEAR 14-15 AND 15-16.

    Reply

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