Dec 2014 – Passenger Cars

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December 2014 had a lot of things going for it. The economy has been slowly improving, the country has political stability, crude prices declined sharply leading to a moderation in local pump prices and many manufacturers were offering year-end discounts.

Now all that is bullshit.

The only thing going for December 2014 was fear; the fear that the government will roll-back the excise duty cuts that had been in force since early 2014. This would have resulted in a price increase of INR 15000-INR 25000 for the most popular models. Manufacturers drilled this fear into the fence-sitters’ heads during December and as a result, an unexpectedly larger number of customers lined up showrooms.

To be fair, the government did roll back excise duty cuts and prices have gone up since the New Year. The unexpectedly large number of customers in December coupled with this price increase means that January may be a tad disappointing on the numbers front.

But this analysis is for December, the last month of 2014, the month when the year decided to go out with a bang. In doing so, it left most manufacturers with something good to feel about.

Unless your name is GM India, in which case you still manage a decline in dispatches.

Analysis – Broad Vehicle Segments

Overall, the industry dispatched 152743 Passenger Car units last month. This was a 15.26% improvement over dispatches from December 2013. For Passenger Car dispatches, this was the best December in the last three years, even though falling well short of December 2011 dispatches of 161247 units.

Dec 2014 - Vehicle Segments

It was a good month for Utility Vehicles as well with manufacturers dispatching 43256 units. This was a 7.67% improvement over December 2013 dispatches of 40175 units even though still lower than December 2012 dispatches of 45-049 units.

One grey area of Passenger Vehicles is Vans and the segment did not have a good month. Even the fear of price rise could not improve dispatch volumes and December 2014 ended with volumes of 13026 units, 1.71% down from 13252 units dispatched in last December. The soft-top Van market (Tata Magic) has collapsed and it would be some time before the segment would again touch the peaks of 2012. December 2012 dispatches in the Van segment had been 20733 units.

Overall, Passenger Vehicles ended December 2014 with volumes of 209025 units, an increase of 12.41%. This was the best December in the last three years for Passenger Vehicle dispatches and only a handful of units less than December 2011 dispatches of 209236 units.

Micro, Mini & Compact Segment

The Micro, Mini and Compact segments of the market form the base of the pyramid and most new car buyers enter the market in one of these three segments. Collectively they account for a significant percentage of GDP for 63% of the total Passenger Vehicles market.

In December 2014, most manufacturers managed higher dispatches in the segment. Market leaders Maruti-Suzuki dispatched 76157 units in the month, a 5.7% growth over previous year. This made this the best December ever for the carmaker.

Dec 2014 - Mini, Micro & Compact

Rival Hyundai witnessed a sharp jump in dispatches, driven by a good response for the i20 Elite and continuing healthy demand for the i10 Grand and Xcent models. At 30378 units, this was the best December ever for the carmaker.

Tata Motors witnessed a smart jump in dispatches as well. At 9924 units, dispatches in the Micro, Mini and Compact segments were up nearly 60% over previous December. However, they are still significantly below from the highs of 2011. In December 2011, Tata had dispatched more than 22000 units. At the model level, Tata is still struggling with the Nano whose volumes have stabilised at around the 1500 units per month, while the Zest has received a lukewarm response with volumes just above 3000 units.

Honda continued its good run in December, dispatching 6296 units, a 14.5% jump from 5484 units dispatched a year back. Again, this was the best December ever for the carmaker in the Micro, Mini & Compact segments.

Volkswagen also had the best December ever (gasp!) in the Micro, Mini & Compact segments. The company dispatched 2961 units of the Polo, a near 60% jump over December 2013 dispatches of 1856 units. Volkswagen has done a good job of stabilising Polo sales at just below 3000 units per month even though the Vento is still facing tough times.

If there was an award for consistency, GM India has a good shot at it. The company continued to post a sales decline even when nearly the entire industry has turned the corner, Tata included. For GM India,dispatches of the Beat and Sail U-Va stood at 1563 units, a 45% drop from December 2013. This was the worst December in the last six years for Chevrolet in the Micro, Mini & Compact segments.

Joining GM India in consistency was Renault which did not see any improvement in Pulse dispatches. At 348 units, Pulse dispatches were 46% down from previous year, making this the worst December ever for Renault India in the Micro, Mini & Compact segments.

Sister brand Nissan+Datsun posted a 81% jump in Micra+Go dispatches. Statistics aside, this is not going to make anyone happy at Nissan. While this was the best December for Nissan+Datsun in the last three years in the Micro, Mini & Compact segments, the volume was still lower than what the Micra had managed on its own in December 2011.

Turning the corner was Toyota whose Liva hatchback dispatches were nearly 40% higher than December 2013 dispatches.

Mahindra and Fiat had indifferent months, both seeing a heavy decline in dispatches. At 62 units, the Mahindra Vibe is on ventilator support. With no direct replacements planned, it would be interesting to see how long Mahindra flogs the old generation Logan platform. Without a reinvention, repositioning, or both, the Vibe is almost dead.

Fiat’s Grande Punto dispatches were 307 units, 46% down from previous year. Fiat’s resurrection seems to be losing steam over the past couple of months and we would be keenly watching the brand’s volumes in the coming months.

Ford dispatched 151 units of the Figo in December 2014. That is not a typo. The spectacularly low volume hints at the end of Figo’s production and plant retooling for the next generation. We should be expecting the next generation Figo / Ka in showrooms in the next few weeks.

Super Compact and Mid-Size segments

Maruti-Suzuki is seeing a good response for the Ciaz. Here good response is a relative term — the Ciaz is nowhere close to matching the City’s volumes; at the same time, it beats the SX4 by a mile. In December 2014, MSIL dispatched 5407 units of the Ciaz and DZire Tour, a 390% jump over previous year. Comparison beyond 2013 is futile in these vehicle segments as Maruti-Suzuki has only recently moved the DZire from Super Compact to Compact segment.

Hyundai’s Verna is facing a midlife crisis and dispatches were down 24% from previous year, at 1903 units. This was the worst December in the last five years for Hyundai in the Super Compact and Mid-Size segments.

Tata Motors’ train wreck affair with the Manza continued and December accounted for 32 units in dispatches. Needless to say, this was the worst December in the last six years for the company in the Super Compact and Mid-Size segments.

Ford dispatched 211 units of the Classic and Fiesta. The Classic is likely to be discontinued soon and replaced by the Figo / Ka sedan.

Dec 2014 - Super Premium & Midsize

Honda had a stellar month with the City, dispatching 6012 units. This was the best December yet for Honda in the Super Compact and Mid-Size segments.

GM India managed to dispatch 475 units of the Sail sedan, down 38.5% from previous year. The company is finding selling the Sail tough even after targeting cab operators with the same.

Toyota’s Etios dispatches were 2482 units last month, down 11.5% from previous year.

Also down were Renault’s Scala dispatches at 304 units, compared to 708 units in the previous year.  Badge mate Nissan Sunny managed 468 units, down 6% from previous year.

Volkswagen dispatched 1012 units of the Vento, marginally down from 1050 units dispatched last year. Sister Skoda did better, managing 1168 units of the Rapid sedan, 11.7% up from previous December.

Executive Segment

The Executive segment has been under pressure from the Mid-Size segment from below, the UV1/UV2 segments from the sides and the used Luxury vehicle segment from the top. For some time now, the segment has also become a one horse race where the freshest product, irrespective of manufacturer, accounts for a majority of sales. Some manufacturers like Skoda have also fine-tuned their strategy where they have foolishly strategically priced their cars out of the stratosphere, making them irrelevant.

Most products in the segment also suffer from lifecycle problems. Peak sales are often achieved very early in the lifecycle and the manufacturer is left fending off declining sales through the remaining lifecycle.

Dec 2014 - executive Segment

In December 2014, the segment accounted for dispatches of 1630 units in all. This was a 44.6% jump over December 2013 dispatches of 1127 units. Of this, the Toyota Corolla – the freshest car – accounted for 895 units. Another fresh car – the Skoda Octavia – has happily committed suicide with its atrocious pricing & the brand’s service quality reputation and accounted for all of 61 units. This is the worst December ever for Skoda in the Executive segment. Coming mere months after a new product launch is the sign that the brand’s life in India may be short worrying.

Sister brand Volkswagen shipped 97 units of the Jetta to dealers in December 2014. This was a fall of 24% and the worst December in the last six years for the company in the Executive segment.

The Chevrolet Cruze accounted for 96 units, a 9.4% fall from previous year. Again, this was the worst December for the brand in the last six years in the Executive segment.

Hyundai dispatched 139 Elantras in December, a 36% decline from previous year. The current Elantra has been accepted in the market, unlike previous generations. However, lifecycle issues are now catching up.

The Fiat Linea is an anomaly here – it belongs to the segment only due to its size and not pricing or prestige. December 2014 dispatches were 313 units, 55% up from previous year dispatches of 202 units.

Premium Segment

The Premium Segment is dead and we won’t even cry “Long live…” because there is no hope that the segment will ever bounce back in our lifetime in EMMAAA’s ten year forecast horizon. In December 2014, the segment accounted for 128 units in all with the Skoda Superb counting 112 units out of that. Everyone else has cars rotting at dealerships kit supply issues inventory issues and didn’t make a mark in December.

Any which way, we decline to write beyond this for a segment becoming irrelevant every passing day.   

Tomorrow we look at Utility Vehicles and Vans dispatches in December 2014.

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