Huge discounts fail to boost auto sales in Dec
Automobile companies offered huge discounts, as much as Rs 1.5 lakh on some models, to perk up sagging sales in December and clear stocks of 2012 models. Still, despite these discounts, high decibel advertising campaigns and price hike warnings from Jan, customers turned their back to passenger cars.
January 03, 2013 / 17:04 IST
Nachiket Kelkar
Moneycontrol.com
Automobile companies offered huge discounts, as much as Rs 1.5 lakh on some models, to perk up sagging sales in December and clear stocks of 2012 models. Still, despite these discounts, high decibel advertising campaigns and price hike warnings from Jan, customers turned their back to passenger cars, a sign that people are still hesitant to loosen their purse strings amid weak economic sentiments, expensive loans and high fuel prices. India's second largest car maker Hyundai, for instance, saw sales slip 2.5 percent to 47,833 units. Domestic sales of Hyundai, in fact, were down near 10 percent last month. Top car maker Maruti Suzuki saw sales rise 3.2 percent to 95,145 units, helped by strong demand for its Ertiga MUV and compact DZire. But demand for its mini cars, which include the Alto, 800, WagonR and A-Star and mid size sedan SX4 continues to wane. Van sales have also been flat.Maruti's multi-national rivals like Toyota, General Motors and home grown Tata Motors too saw sales decline. Tata Motors ran the 'Ultimate December Offer' last month, offering discounts and cash benefits from 25,000-1.5 lakh on its passenger vehicles. Yet, sales of Tata passenger vehicles, which include Indica, Vista, Manza and Aria, halved.Passenger vehicles is not the only segment hurting Tata Motors. Its commercial vehicle sales, especially medium and heavy trucks, continue to take a knock amid low demand from fleet operators due to the overall slow economy. Its overall CV sales were flattish at 47,515 units, but its M&HCV sales plunged to 9,866 units from 18,247 units.Closest rival Ashok Leyland too saw its sales tumble 19 percent. Barring the small truck Dost, which has seen good off-take, its CV sales slumped 34 percent to 5,230 units.Meanwhile, Mahindra & Mahindra continues to see good demand for its predominantly diesel powered utility vehicles. Its UV and Verito sedan sales rose 18 percent to 22,761 units. But there was not much demand for its commercial vehicles.Elsewhere in the two-wheeler space, Bajaj Auto reported highest ever sales for December, clocking 13 percent year-on-year growth at 3.44 lakh units. But TVS Motor saw its sales dip 8 percent to 1.56 lakh units, especially due to 32 percent drop in scooter sales. Its bike sales rose 6 percent, helped by new launches like the Phoenix. Hero MotoCorp reported flat growth at around 5.4 lakh units.Industry body Society of Indian Auto Makers (SIAM) has already lowered its car sales growth forecast for this financial year to 1-3 percent. Analysts say that sales are only likely to pick up if interest rates on auto loans reduce and CV sales will remain in the slow lane unless the overall economy picks up. "While demand remains sluggish for two-wheeler and passenger cars, the worst hit is the M&HCV segment. We expect auto volumes to largely remain sluggish in the near term. Overall volume recovery is expected to happen steadily over FY14," said Arun Agarwal of Kotak Securities - Private Client Research."While Dec is typically a lean month, we expect the weakness to continue in the near term as well, given that auto players have to contend with a high base amid a weak economic environment. In the CV space, LCV volumes should maintain a strong clip while M&HCV volumes are expected to remain lackluster for the next two quarters," said Mihir Jhaveri of Religare Institutional Research.Barring Hero MotoCorp and TVS Motor, most auto stocks accelerated last year. Eicher Motors was the top performer gaining 95 percent in 2012, while Tata Motors gave 75 percent returns and Maruti Suzuki 62 percent. Overall, the CNX Auto Index gained 42.50 percent, outperforming the wider Nifty index, which was up 28 percent, last year. Bajaj Auto and M&M are Religare's top picks. nachiket.kelkar@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
