July auto sales mixed; industry keenly watching monsoon

For the automotive industry, the trend of mixed performances continues in July. While Maruti Suzuki continues to outperform in the car segment, worries persist for two-wheelers and light commercial vehicles. Meanwhile, there has been resurgence for the medium and heavy commercial vehicles.Though the monsoon has not been as bad as the Met department had predicted, the demand concerns in the rural market still continue. So, the industry is keenly watching the second half of the monsoon season.Most of the two-wheeler manufacturers registered a weak set of numbers except Bajaj Auto and Royal Enfield, which managed to grow well. Bajaj Auto's domestic sales during the month grew over 10 percent, while Royal Enfield's total sales were up 49 percent. However, TVS Motor, Hero MotoCorp, and HMSI were all under pressure in July. Another segment that saw demand shortfall was light commercial vehicles. Market leader Tata Motors' sales in the segment fell 21 percent but competitor Ashok Leyland managed to record a modest 5 percent growth. Mahindra and Mahindra saw sales in both its major businesses slide; sales in its automotive business fell 6 percent and tractor sales were down 11 percent in July. However, Baba Kalyani, CMD, Bharat Forge clearly believes that the outlook and current performance in the medium and heavy commercial vehicle sector is healthy. “I think the worst is over. I think the commercial vehicle sector should start seeing a fairly good upturn – whether it grows 15 percent or 20 percent, is difficult to forecast, says Kalyani.  He expects to see a 15-20% growth in the CV space.Kalyani feels that with the increase in activity in the construction and industrial sectors, demand for heavy trucks will only increase in the remainder of the current financial year. Notwithstanding the low base of 2014, sales of trucks in July were encouraging. Tata motors' sales in the segment rose 21 percent, while those of Ashok Leyland were higher by 53 percent. In the passenger vehicle space, new launches drove sales for most manufacturers; Maruti Suzuki's domestic volumes were up over 22 percent, while those of Hyundai rose nearly 25 percent and aided by the re-launch of its Jazz hatchback, Honda cars registered an 18 percent increase in sales in July, helping it become the third largest passenger car manufacturer in India, ahead of M&M.