Sip Cautiously – June Vehicle Sales Report

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For the Automotive industry, June is a month that everyone hopes would pass by quickly. Most of India is reeling under a severe summer wave in June and prospective car buyers take-off for cooler climes. This leaves car dealers high and dry and desperate to even get decent walk-in volumes.

For most of the industry, June is an off-season and many carmakers schedule their annual plant maintenance shutdown during the month. Meanwhile, sales executives make a lot of PowerPoint presentations and drink copious amounts of coffee, without doing anything meaningful.

So imagine the irony that Indian passenger vehicle sales choose this very month to stage a bounce-back.

And it’s not a small bounce-back by any count. Passenger Car sales dispatches were up 14.76% from previous June while utility vehicle dispatches improved 6.9% year-on-year. The Vans segment was the only troubled area, declining 8.31% from previous June.

Overall, passenger vehicle dispatches were 218828 units, up 11.23% from June 2013 dispatches of 196726 units.

Vehicle Sales June 2014 vs Previous Years

Save your eyes. Click images to enlarge

It remains to be seen if this is a sustainable bounce-back. As the numbers are dispatch numbers, it may be a temporary build-up of inventory (channel stuffing) at dealers and dispatches in July-Sept quarter may be more subdued. In some cases, the built-up inventory from previous months has been exhausted and dealers are creating fresh inventory at their ends.

Also, not all manufacturers have seen a turnaround. GM, Tata and Volkswagen were heavily down on a year-on-year basis while Mahindra was marginally down. GM India sales were down 21% while Tata sales were down 33% from previous year. Meanwhile, Volkswagen had a disastrous month again, managing to lose 42.5% volumes in June 2014, over previous year.

Micro, Mini & Compact Segments

The meat of the Indian passenger car market lies in the three entry segments – Micro, Mini & Compact – as defined by the Society of Indian Automotive Manufacturers (SIAM). In June 2014, the three segments accounted for 124508 units in dispatches, a 13.04% increase over June 2013 dispatches of 110145 units.

Tata continues to face problems with the Nano as volumes dig in even lower every month. Dispatches in June 2014 were all of 1001 units, 50% decline from June 2013 volumes of 2003 units.

Tata also suffered significant declines in the Indica / Indigo eCS volumes. Dispatches were down 35% from June 2013 as prospective customers are aware that the company would be launching upgraded models in the Zest & Bolt.

Also suffering a significant decline was Ford India, which managed dispatches of 1478 units of the Figo, a 41% decline from previous June. This makes the last month, the worst June in last five years for the company.

Renault suffered a significant decline in segment numbers as well as the Datsun Go sucked prospective customers (if any) of the Pulse. Dispatches were down 60% to only 201 units and there is little hope for a revival.

Mini, Micro, Compact -June 2014

Sister badge Nissan was in the green with a near 7% improvement in dispatches. However, the devil is in the detail. At 2127 units, we expect no more than 200 Micras being dispatched, the rest being Datsun Gos.

Also down, substantially, was Volkswagen, which dispatched 1690 Polos in June. Last year, the brand had managed 3200 units in the same month.

Another problematic model is the Mahindra Verito Vibe, whose dispatches at 149 units were 85% down from previous year.

GM maintained consistency and the Spark-Beat-Sail HB dispatches were down 21% from last year. This makes June 2014 the worst June in the last six years for the company in this segment.

On the flip side, both Maruti-Suzuki and Hyundai had their best June ever. MSIL dispatches were 69911 units, 34% jump from last year. Hyundai managed to shift 29680 cars to its dealers, a near 13% jump from previous year.

Also celebrating its best June ever was Honda, which managed to dispatch 8515 units of the Brio & Amaze models.

Super Compact and Mid-Size segments

The Super-Compact and Mid-Size segments are the next biggest segments as per SIAM classification. The Honda City and the Maruti DZire models have lately propelled the segments. June 2014 was a good month overall for the two segments as cumulative dispatches reached 33567 units, a 21.5% improvement from June 2013 dispatches of 27644 units.

Maruti had a good month and managed to dispatch 16312 units of the D’Zire + SX4 models. This represents a 27% improvement from June 2013 dispatches of 12862 units.

Honda had a terrific month with the New City as dispatches touched 7723 units, a jump of 322% from previous year.

Also up, albeit marginally, was Toyota whose 2178 units of dispatches were a 2.5% increase over June 2013 dispatches.

However, everyone else had a horrible month. Nearly everyone suffered deep gashes in their dispatch numbers in the Super Compact and Mid-Size segments. Ford dispatched all of 574 units, a 4% drop over previous June while Hyundai Verna dispatches were own 17% at 3222 units.

Mahindra is running out of initiative on the Verito range and badly needs a freshening up. June 2014 dispatches were all of 139 units, a 57% decline from June 2013 dispatches. This made last month the worst June for the company in the last six years.

Super Compact, Mid-Size

Volkswagen too needs some new tricks as Vento dispatches were down 38% from previous June, making it the worst June in last six years for the company in the segment. Sister brand Skoda too suffered a 29% drop in Rapid dispatches, the worst June in last three years for the company.

At 172 units in June 2013, Tata Motors had reached a point where it was difficult to fall any further. The company managed to do exactly that by dispatching all of 102 units in June 2014, a 40% decline year-on-year.

GM India’s volumes were down 48% from previous June as the Sail bubble has burst quite convincingly.

Also quite hopeless is the situation for the Nissan Sunny and the Renault Scala. Dispatches of both were down significantly. Renault Scala was down 71% from previous year, to 226 units, while Nisan Sunny was down 39% year-on-year to 556 units.

Utility Vehicles

The utility vehicles saw cumulative dispatches of 43849 units, a 6.9% rise over June 2013 dispatches of 41018 units.

Ford managed a 29.3% improvement in EcoSport dispatches to 5176 units, from 4002 units in June 2013. Meanwhile, the Duster lost volumes in June 2014, falling 15.7% to 3814 units, from 4523 units in June 2013. However, Renault-Nissan gained more from the rebadged Nissan Terrano, with shipments of the Duster-sibling reaching 1679 units.

Mahindra’s volumes in the UV1 segment (Quanto, Bolero, Thar) were under pressure even though the company managed to improve volumes in the UV2 segment (Scorpio, XUV, Xylo). The dispatches of the Rexton were also down in the month. Overall, Mahindra billed 16492 UVs to its dealers a 3.62% improvement over previous years.

At the top of the UV pyramid, Toyota Fortuner dispatches were down 8.13% year-on-year. However, the Toyota SUV still outsells the entire competition combined.

Toyota also managed to improve the dispatches of the Innova MPV. In June 2014, the company dispatched 5377 Innovas, a 8.32% improvement over previous June.

Vans

The Vans segment was a story of contrasts last month. While dispatches of Hard-Top vans like the Maruti-Suzuki Eeco / Omni improved significantly, dispatches of soft-top variants like the Tata Ace Magic crashed alarmingly. Hard-Top vans were up 29.8% over previous year while Soft-Tops were down 52% from previous June.

Medium & Heavy Commercial Vehicles

While the slowdown in M&HCVs continues in the market, there are pockets in the segment, which are turning to green.

In the month, the industry billed 3725 Buses in all, a 17% decline from June 2013 sales of 4483 Buses.

The slowdown is still quite severe in the Medium commercial vehicles segment. The industry sold 5595 units, a decline of 15.7% over June 2013 sales of 6638 units.

But the recovery has started in heavy commercial vehicles. Heavy commercial vehicles with rigid axles improved 5.1% from 6797 units in previous June to 7146 units last month. Meanwhile, sales of Heavy Commercial vehicles with trailers reached 1948 units, a 119% jump from June 2013 sales of 891 units.

Two-Wheelers

Two wheelers have been a predictable story in the last few months, growing at a healthy peg, just above the double-digit mark. Overall, 1.26 million two wheelers were dispatched in June 2014, a nearly 13% improvement over 1.12 million units dispatched last June.

Scooter dispatches were 323178 units, a 25.2% increase year-on-year. Motorcycles grew at a slower peg but from a much bigger base. In June 2014, 876196 units were dispatched, a 9.6% growth over June 2013 dispatches. Moped sales also improved by 5.3% from June 2013, from 59061 units last year to more than 62000 units in June 2014.

Special Issues – Maruti’s Mini-Segment Volumes

One particular data-point that caught our attention was Maruti-Suzuki’s dispatches in the Mini-segment. The company dispatched 47618 units in June 2014, a 52% improvement over June 2013 dispatches of 31314 units.

That to us is a bit surprising. GM and Hyundai, the only rivals in the segment have both experienced substantial declines in their segment volumes.Maruti Mini-segment Volumes

Maruti-Suzuki has no new models in the Mini Segment, and the newly launched Celerio (compact segment) has been taking sales away from the Mini segment models, a sudden jump in segment volumes is surprising. In fact, over the last few months, the Mini-segment has been under pressure while the Compact segment has held steady.

This to us means that either of the following has happened:

  1. The company’s grassroots level sales push has suddenly thrown up results. Unlikely. Results are seldom sudden and volumes are built up steadily over a period of time.
  2. The sales team got over enthusiastic and dumped some cars on dealers. Quite likely.
  3. The poor performance over the last five months was due to the system inventory being cleaned and the boom in June is fresh inventory being taken in by dealers. Very likely.

Any which way, this is a data-point that we would be closely watching over the next few months.

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