May auto sales stay sluggish; UV's, LCVs also hit slow lane

Moneycontrol Bureau

Data released by most automakers over the last few days shows sales across two-wheelers, passenger vehicles and commercial vehicles remained weak in May.

-- India's largest passenger car company Maruti Suzuki reported a 14 percent dip in sales. While mini car sales saw some growth, its DZire compact sedan and Ertiga UV, which have been runaway successes, also saw sales cool, suggesting the recent hike in diesel prices were impacting sales.

-- Mahindra & Mahindra, which is India's largest utility vehicle maker, reported just 5 percent rise in domestic sales. The additional 3 percent excise duty on SUVs, apart from the diesel price hike, is hurting demand, the company said.

-- Slowdown in the medium and heavy trucks segment, driven by the overall slowdown in economy, continued in May with both Tata Motors and Ashok Leyland reporting 19 percent and 22 percent decline respectively.

-- Importantly, sales of light trucks like the Ashok Leyland Dost and Tata Motors' Ace also seem to have hit the slow lane, especially on the back of higher base a year ago.  Tata Motors' LCV volumes fell 11 percent, whie Dost sales were up just 1 percent.

-- Two-wheeler sales also remained under pressure, although motorcycles were in demand due to the wedding season. Hero MotoCorp's sales were up just 0.2 percent, while Bajaj Auto said its domestic motorcycle sales gained 3 percent. TVS Motor's total sales fell 6 percent, but it also a pickup in motorcycles sales, helped by the newly launched Phoenix.

-- Citigroup says with industrial and infrastructure demand showing no signs of recovery, M&HCV sales are set to remain slow, but a relatively weaker positioning compared with Tata Motors resulted in Ashok Leyland losing volumes more.

-- On the other hand, Tata Motors' passenger vehicle presence remains weak and only a significant overhaul of the model portfolio will help buoy demand, Citi added.