Weakening macroeconomic condition marked by rise in crude oil prices, rupee depreciation, rising interest rate regime coupled with regulatory challenge coming from mandatory long-term insurance as well as natural calamity like floods in Kerala had dampened the demand for most of the auto majors in India in September 2018. However, festive season brought cheers to selected pockets in the month of October 2018.
Weakening macroeconomic conditions marked by a rise in crude oil prices, rupee depreciation, rising interest rate regime and regulatory challenges from mandatory long-term insurance as well as natural calamity like floods in Kerala dampened the demand for most of the auto majors in India in September 2018. However, the onset of the festive season managed to bring cheer to select pockets in the month of October 2018.
What continued to perform well was the commercial vehicles (CV) segment. An improved rural sentiment, the government’s focus on infrastructure and increase in mining activities helped. Three-wheeler (3W) sales also gained strength on the back to government’s decision to end Permit Raj and no permit regime for alternate fueled 3Ws. Two-wheeler segment witnessed strong momentum ahead of festive season.
Passenger vehicle (PV) sales continue to disappoint primarily because of Kerala flood impact, a high base of last year and adverse macro factors. Further, improvement in the global market is boosting export sales for Indian auto majors.
Commercial Vehicle – Continues to be Robust
Despite liquidity constraint, the CV segment continued to post healthy monthly sales volume and remained resilient. This was on the back of increasing demand from construction, focus on infrastructure and increase in mining activities.
FMCG and e-commerce sectors, as well as increasing demand from container and refrigerated trucks, led to a strong growth in the LCV (Light Commercial Vehicle) segment.
Tata Motors registered a 20 percent year-on-year (YoY) growth in CV volumes in October 2018. It posted strong growth of 27.2 percent in M&HCV segment on the back of new Tata Ultra range of trucks which are gaining significant acceptance and contributing to volumes.
M&M posted a healthy growth on the back of strong demand coming in from the LCV segment driven by the newly-launched Maha Bolero Pik-up. The management expects the growth momentum to continue due to some recent refresh launches as well as the better performance of its product portfolio.
Cars Segment – adverse macro impacting
Amid rising cost of total cost of ownership on the back of increasing fuel prices, rising interest rate and mandatory long-term insurance coupled with the flood in Kerala (around 11 percent exposure), the leader, Maruti, posted a flat domestic volume for the month.
For Tata Motors, the passenger car segment grew of 10 percent (YoY). It introduced four new product interventions to maximise the festive season sales.
M&M posted a muted growth of 2.6 percent. The management indicated that with the launch of the Marazzo, it hopes to see buoyancy in passenger vehicle numbers, going forward.
Two-wheeler (2W) segment: Bajaj continues to shine
In the two-wheeler space, Bajaj Auto leads the pack with a strong growth of 32.9 percent in the month followed by TVS which posted a growth of 25 percent. TVS’s strong growth was aided by bikes (20 percent) and scooters (41.3 percent). Hero, the leader in the space, also posted a strong growth of 16.4 percent on a very high base. Eicher, on the other hand, continued to post muted growth.
Three-wheeler (3W): Steller show
The overall 3W market continued to be robust. TVS posted a very strong growth of 56.1 percent and M&M posted a growth of 13.1 percent. Bajaj Auto, the leader in the space, posted a growth of 7.6 percent only due to a very high base of last year.
Tractors: gaining on positive rural sentiments
Delayed festive season and deficit in rainfall had hurt tractors volumes for September. The momentum was back in the month of October ahead of the festive season. Escorts posted a 28.7 percent YoY growth and M&M grew 17.7 percent YoY.
Exports: strong momentum
The overall revival in the global economy is reflected in the numbers of some of the leading automobile exporters. Barring Maruti and Eicher Motors, all other auto majors posted a very strong YoY growth in the overseas market.
Moneycontrol Research page.