Demonetisation weighs on December passenger vehicle sales

The ongoing cash crunch with passenger vehicle buyers, following the government’s demonetising of Rs 500 and Rs 1,000 currency notes on November 8, 2016, weighed on top carmakers like Maruti Suzuki, Hyundai and Mahindra. All three manufacturers reported a decline in their sales numbers for December 2016, the first full month of sales after demonetisation kicked in.

While it is known that December typically sees slow sales as buyers are not so keen to put their money down on new cars with registration in the last month of the year, consumers aren’t so forthcoming despite most automakers offering handsome discounts.

Maruti Suzuki

Country’s largest carmaker Maruti Suzuki recorded a year-on-year sales decline of 4.4 percent in December 2016 with 1,06,414 units going home to new car buyers compared to 1,11,333 units in the same month in 2015.

The company’s bread-and-butter duo, the Alto and Wagon R, sold 31,527 units in December 2016 compared to 37,234 units it sold in the same month in 2015, down a sizeable 15 percent year-on-year. Sales of the compact car quintet of the Swift, Ritz, Celerio, Baleno and Dzire were also down at 43,295 compared to 47,354 units in the same month in 2015, down 8.6 percent year-on-year. The Dzire Tour, which is sold only as a taxi, sold 2,559 units compared to 3,614 units sold in the same month in 2015, down 29 percent year-on-year. Even the two vans – Omni and Eeco – which usually give a fillip to overall sales numbers are down 17 percent to 9,224 units compared to 11,122 units in the same month in 2015.

However, thanks to surging demand for the Vitara Brezza compact SUV, Maruti’s utility vehicle sales soared 75 percent year-on-year to 16,072 units compared to 9,168 units in the same month in 2015. For the fiscal year till date (April-December 2016), Maruti Suzuki India has sold a total of 9,71,958 units, which is a 9.3 percent year-on-year growth.

It is understood that the Budget for FY2017-18, to be announced on February 1, 2017, will be a consumer- and industry-friendly one. If that is the case, it might give a fillip to passenger vehicle sales. Also, the currently heavily-strapped-for-capacity Maruti will see its all-new Gujarat plant go on stream in early February, rolling out at least 10,000 units by end-March 2017.  

Hyundai

Hyundai Motor India's sales also saw an on-year decline of 4.31 percent with 40,057 units sold in December 2016 compared to the 41,861 units it sold in the same month in 2015.

Mahindra

Mahindra & Mahindra (M&M), which sees a large part of its sales come from rural India, reported sales of 16,698 passenger vehicles (comprising UVs, cars and vans) in December 2016, down 8.24 percent compared to 18,197 units sold in the same month in 2015. This comes on the back of its November 2016 numbers which were down 33 percent year-on-year.

Commenting on the performance for December 2016, Pravin Shah, president and chief executive (Automotive), M&M, said, “The auto industry continues to go through challenging times, grappling with the short-term effects of demonetisation as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months. We do hope that the implementation of GST, along with some right initiatives taken by the government in the upcoming Union Budget on February 1, will provide a veritable boost to the auto industry and the economy in general.”

Toyota

Toyota Kirloskar Motor (TKM), however, was immune to the demonetisation as domestic sales of the carmaker went up by 22.03 percent to 12,747 units in December 2016 compared to 10,446 units in the same month in 2015. The newly launched Toyota Fortuner and the new Innova Crysta were the main growth drivers for the Japanese automaker.

Renault

Meanwhile, Renault India, whose domestic sales have been powered by the game-changing Kwid hatchback, has registered a year-on-year growth of 9.2 percent in December 2016 with sales of 11,244 units compared to 10,292 units sold in the same month in 2015. For calendar year 2016, the carmaker sold a total of 1,32,235 units, up 146 percent compared to 53,847 units sold in calendar year 2015.

"We are on track with a 4.5 percent market share at the end of 2016, achieving a robust three-digit growth over 2015. We plan to launch at least one new product every year, over the next five years, beginning with some exciting product innovations starting this year,” said Sumit Sawhney, country CEO and MD, Renault India Operations.

Tata Motors

Further, Tata Motors reported sales of 10,827 passenger vehicles in December 2016, a year-on-year growth of 12.49 percent compared to the 9,625 units it sold in December 2015. The sales growth is attributed to growing consumer demand for the Tiago hatchback. Cumulative passenger vehicle sales growth in the fiscal, were 1,12,539 units, up 17 percent compared to 95,979 units in last fiscal.

Nissan 

Nissan Motor India has reported domestic sales of 3,711 units in December 2016, a 21 percent year-on-year increase compared to 3,065 units sold in the same month in 2015. The carmaker has also reported that for the first three-quarters of the fiscal year 2016, combined Nissan and Datsun sales have registered 50 percent year-on-year growth.

In October 2016, the Nissan Motor India Group, which manages the sales and service support for both the Nissan and Datsun brands, announced plans to introduce up to eight new cars from the two brands to India by 2021. These new products include the recently-launched Nissan GT-R and the launch of X-Trail Hybrid in 2017.

Ford 

Meanwhile, Meanwhile, Ford India's domestic sales were down by 6.04 percent to 5,566 units in December 2016, compared to the 5,924 units it sold in the same month last year. However, it reported strong exports of 17,904 units in December 2016, up 262 percent year-on-year compared to 4,941 units exported in the same month in 2015.

The surge in export numbers has come about thanks to the growing demand from overseas markets for the new made-in-Chennai Figo, which is sold as the Ka+ in the UK and Europe. The new Figo gave a fillip to Ford’s exports in end-July when it started shipments to European countries. Meanwhile, it is learnt that Ford Motor Company will also sell its made-in-India EcoSport in the US. Unveiled at the Los Angeles Motor Show in mid-November, the facelifted version of the EcoSport will make its debut in the US by early 2018.

Passenger vehicle sales likely to miss the three-million mark in 2016

Given the slowing sales of the top three passenger vehicle manufacturers, particularly Maruti Suzuki India and Hyundai Motor India, it would not be wrong to surmise that the industry could miss hitting the three-million PV sales mark in calendar year 2016 by a whisker.

In November 2016, PV sales grew by barely 1.82 percent to 2,40,979 units. With December typically seeing lower sales, since buyers prefer to delay purchases to the new year, overall numbers and growth could be flat or maybe in negative territory. Given that overall December sales finally round off at around 2,30,000 units compared to 2,30,960 units in the same month in 2015, it could be estimated that overall numbers for the year fall short of the three-million mark by just 31,243 units.