We Flunked! – Half Year Sales Report of the Indian Auto Industry

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The first six months of 2014 have seen the slowdown of 2013 getting extended in to the New Year. Almost all vehicle segments, barring two wheelers, have been bleeding heavily and there is red splattered across the report card for H1 2014.

This was one of the weeks when we were feeling too lazy to write felt that the analysis should be represented more by graphics and captions with only some text interspersed.

So here goes.

Looking across all vehicle segments, only two-wheelers escape with any growth. Let us rephrase that – two wheelers actually do very well, thank you. With a 13.4% growth in the two-wheeler segment in H1 2014, the year has started off very well for the industry.

 

All Vehicle Segments - H1 2013 vs H1 2014

Don’t strain your eyes. Click to enlarge all infographics

However, very little beyond two-wheelers cheer us. The worst performers are the Small Trucks & LCVs – the segment has declined by 23.76% in the first six months. Any recovery from hereon would be welcome, even though it may come because of pent-up demand, than a genuine growth in the economy. Much of the decline in the LCV segment has come due to the crash in the Micro and Small trucks (Tata Ace segment) during the last few months.

Commercial vehicles up the GVW class didn’t fare any better either. M&HCV sales were down 15.45% over H1 2013 as the market is still correcting.

Passenger vehicle sales were down 3.17% year-on-year. The number could have been worse but for the good bounce-back during the last two months.

Also down were three wheelers where the slowdown in commercial vehicles and the weak rural economy pushed sales down by 3.49% from last year.

Passenger Cars

The combined Micro + Mini segment declined by 8.16% as the overall slowdown in sales was amplified by changing customer preferences, even first time buyers moving towards Compact cars. Hyundai led the decline with a near 19% drop in dispatches.

The Compact segment grew by 7.58% because of new launches and customers moving up from the Mini segment. Data was also helped by manufacturers SIAM arbitrarily including the dispatch numbers of Super Compact sedans like the Xcent and Amaze in the Compact segment.

 

Passenger Cars - H1 2014 vs H1 2013

 

Nearly all-major players – Maruti-Suzuki, Hyundai and Honda – recorded impressive growth figures even as Ford, GM, Tata and Toyota bled.

The Super Compact segment declined by 5.02% over H1 2013 as Hyundai Xcent and Honda Amaze numbers moved to the Compact segment. Even though Maruti-Suzuki improved its numbers marginally, heavy hemorrhaging by Mahindra and Toyota resulted in an overall decline.

Everything above that was a disaster as the Mid-Size segment was down 6.12%; the Executive segment declined 12.75%; and the Premium segment declined by 39.53% in the first half of the year.

Utility Vehicles    

The UV1 segment, representing small, entry-level SUVs registered a growth of 6.3% year-on-year. The Ford EcoSport and Nissan Terrano, both of which were in the Data Honeymoon period, helped the numbers.

Data Honeymoon is the period within 12 months of a vehicle launch when the sales numbers cannot be compared to the preceding year. Any sales is growth.

Meanwhile the Force Gurkha and Tata Sumo are fast becoming irrelevant; both posted strong declines. The Duster too saw a sharp decline in sales but the Terrano picked up more than what the Duster lost and this should keep Renault-Nissan happy.

 

 

Utility Vehicles & Vans - H1 2014 vs H1 2013

 

Numbers were unimpressive in the UV2 segment as it declined by 9.98% over H1 2013. Every constituent was in the red with the Tata Grande and Toyota Innova posting the biggest declines.

The too-small-to-bother-us UV3 segment improved by 18.67%, the most for any passenger vehicle segment. Now who would have guessed that the Tata Aria would register such an impressive growth? It seems that sales managers are aggressively pushing Arias down to dealers. However, overall segment numbers are just above 2000 units and things may go topsy-turvy in H2 2014.

Numbers declined heavily in the UV4 and UV5 segments with UV4 sliding down by 18.84% and UV5 by 58.2%.

Vans

The two Vans segments were a study in contrast. While the Maruti-Suzuki Eeco and Omni managed to improve V1 (Hard top vans) segment by 12.46%, Soft-Top vans crashed violently. The 62.86% decline in Soft-Top van sales was the worst for any passenger vehicles segment and is indicative of the fragile state of the rural economy.

A bad monsoon would be another punch in the gut for the segment.

 

 

B & M & HCVs - H1 2014 vs H1 2013

 

Buses & Medium & Heavy Commercial Vehicles

The B&M&HCV segment has been bleeding but some of the sub-segments have registered growth in the last 2-3 months. The green shoots bring optimism to a segment, which is witnessing its third straight year of decline.

Buses declined by 22.16% as private operators did not show much interest in replacing or adding to their fleets. Fresh government support is much needed.

Medium Trucks were down 29.89% and there is no indication whatsoever of any recovery in the segment.

Also down were Heavy trucks with rigid axles – the segment declined by 10.41% in H1 2014 over previous years. Most of these trucks are used for construction purposes and in infrastructure projects and any revival in infrastructure development would be good for the segment.

However, Heavy trucks with trailers segment have restored our faith in god grown by 41.49%, albeit from a much smaller base. This indicates that the economy may be turning around at its top-end and some fleet operators are now developing the confidence to buy fresh trucks.

EMMAAA has just concluded its first quarterly survey of M&HCV fleet operators. Conducted using a mix of online and call centre data collection, the survey asked fleet operators on their intention of buying new trucks and gauged the challenges they are facing in the current economy.

The extensive sample (92 operators representing a cumulative fleet of more than 23000 trucks) is a good indicator of the fleet operator’s confidence in his business and the economy. It is also a good indicator of the future sales potential of commercial vehicles.

To ask for your copy of survey results and to subscribe to our quarterly M&HCV Fleet Operator Survey service, mail us at sales (at) emmaaa (dot) com

Light Commercial Vehicles

Now we enter the real disaster zone – LCV sales were down 23.76% as both Goods & passenger carriers suffered declines. Passenger carriers (HVANs and Minibuses) were the better of the lot with sales declining by only 7.16% over H1 2013.

 

LCVs - H1 2014 vs H1 2013

 

However, Goods carriers crashed 25.64% over last year as the weak economy and stale products combined to deliver a double blow. The trend was better in the larger GVW LCVs as the most hit were the Micro Trucks and Small Trucks. Micro Trucks (<2T GVW) declined by 36.03% in H1 2014 while Small trucks (2T-3.5T GVW) declined by 15.9%.

Two Wheelers

Scooters continued their scorching pace of growth with the segment posting an increase of 30.77% over H1 2013. Motorcycles grew at a more sedate 9.09% while Mopeds (even them!) improved their numbers by 1.25% over H1 2013. Motorcycle sales are forecasted (buy forecast here) to cross 23 million units by 2018.

Two Wheelers - H1 2014 vs H1 2013

 

Within Motorcycles, the story gets better when we move up the engine capacity.  The lowest segment (75cc – 110cc) grew at only 6.93% over previous year. The segment above that (110cc-125cc) registered a 9.02% growth while 125cc-150cc bike sales improved by 9.31% over H1 2013. Meanwhile, sales of 150cc-250cc motorcycles grew at a robust 15.42% over H1 2013.

 

Motorcycles - H1 2014 vs H1 2013

 

 

However, the performance leaders were Big Bikes (>250cc), which have grown 88.15% year-on-year. EMMAAA’s Big Bike Forecast (Buy here) predicts sales to improve by 250% over the next five years.

Big Bikes - H1 2014 vs H1 2013

 

Over the next six months of 2014, EMMAAA forecasts a mix of cautious optimism, pent-up demand and genuine improvement to propel vehicle sales. Passenger vehicle sales may recover sufficiently to ensure 2014 ends up in the positive zone overall while B&M&HCV sales should start recovering more confidently by the end of the year. However, Small Trucks and LCV sales remain worrying and are expected to improve only by the mid of next year.

 

 

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2 Responses

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  1. Prakash Gaware
    Aug 08, 2014 - 03:42 AM

    IAR is really helping me a lot

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    • DR
      Aug 08, 2014 - 04:39 AM

      Prakash, Thanks for the appreciation.

      Unfortunately, we had to remove your second comment as it was bordering on advertising and we do not approve that in our comments section. IAR will open up for advertising soon and we will contact you then.

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