Moneycontrol
Last Updated : Mar 04, 2019 04:28 PM IST | Source: Moneycontrol.com

February sales: Tough time continues for automobile companies

Nitin Agrawal @NitinAgrawal65

 

Highlights:
- Disappointing set of February sales numbers by auto majors across all segments
- New axle load norms, tight liquidity and non-availability of finance weigh on commercial vehicle producers
- New product launches aiding passenger vehicle and two-wheeler sales

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Challenging times continue for automobile majors, with their sales numbers for February declining. The decline is due to subdued consumer demand sentiment caused by slowing industrial output, tight liquidity, non-availability of retail finance, higher interest rate and moderate economic activity ahead of general elections scheduled for April-May.

Commercial vehicle (CV) segment numbers were mixed for players in this space. The segment continues to face challenges due to impact of new axle load norms, coupled with liquidity crunch and non-availability of retail finance. Tractor segment was weak in February on the back of a higher base of last year and subdued farm sentiment.

Three-wheeler (3W) sales were mixed due to a very high base of last year. Two-wheeler volumes were also mixed for players in this space. Passenger vehicle (PV) sales continue to disappoint because of higher cost of ownership, high base of last year and adverse macro factors.

Commercial vehicle – continues to be under pressure

Negative impact of new axle load norms and macro challenges, led by liquidity problems, financing issues, rising interest rates and slowdown in economic activity, have dampened customer demand sentiment for CVs. The long-term outlook, however, continues to remain positive due to focus on construction and infrastructure and increase in mining activity.

Company-wise, Tata Motors registered a 9 percent year-on-year (YoY) decline in CV volume, led by 17.3 percent and 0.7 percent fall in the medium and heavy commercial vehicle (M&HCV) and light commercial vehicle (LCV) segments. Volvo Eicher Commercial Vehicles (VECV) also witnessed a 6.7 percent drop. Ashok Leyland and Mahindra & Mahindra (M&M) posted flat growth in its monthly volumes due to decline in M&HCV segment volumes, but was partially offset by rise in LCV volumes.

FEb_CV_SALES

Cars segment: New product launches to help

Car segment continues to show weakness for the eight consecutive month. Increase in the total cost ownership led by rising interest rate and mandatory long-term insurance have dampened consumer sentiment.  Companies in this space have posted a muted/decline in PV volume for February, though new product launches helped.

Market leader, Maruti, posted a 3.3 percent decline in monthly volumes, while Tata Motors’ grew a percent. The management of Tata Motors is expecting strong months ahead on the back of a launch of its new SUV, Tata Harrier, in January. M&M posted a growth of 16.6 percent in its monthly volume, driven by its newly launched XUV300 model.

FEb_PV_SALES

Two-wheeler (2W) segment: Bajaj Auto continues to do well

In the two-wheeler space, Bajaj Auto led the pack with a growth of 6.3 percent in February, driven by aggressive pricing actions taken by the management in its entry-level segment. The impact of which is subsiding on market leader Hero MotoCorp, which witnessed a two percent decline in its monthly sales. Eicher Motors continues to deliver disappointing numbers, posting a decline of 14.3 percent. TVS Motor Company announced a year-on-year growth of two percent on the back of growth accruing from bikes (8.2 percent).

FEb_2W_SALES

Three-wheeler (3W): Mixed showing

The overall 3W market posted mixed numbers in February. TVS posted a very strong growth (41.2 percent) and M&M delivered 10 percent grwoth. Bajaj Auto, the leader in the space, saw a 8.7 percent decline due to high base of last year.

FEb_3W_SALES

Tractors: Gaining on positive rural sentiment

Tractor segment remain mixed with Escorts posting a YoY growth of 9.9 percent as against a decline of 8.1 percent for M&M.  The M&M management expects positive sentiment on the back of recently executed direct benefit transfer to marginal farmers and other pro-rural initiatives by the government.

FEb_Tractor_SALES

Exports: Mixed sentiment

Export market was mixed for companies. Maruti and Tata Motors posted a decline in their February sales numbers, whereas M&M, Bajaj Auto, TVS, Eicher and Escorts saw a growth in February. Tata Motors’ management said the decline was due to congestion at the Bangladesh border, new regulations and political uncertainty in Sri Lanka and slump in the Middle East auto market.

FEb_exports_SALES

For more research articles, visit our Moneycontrol Research page
First Published on Mar 4, 2019 12:46 pm
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