In Q1 FY2019 (April-June 2018), the Indian passenger vehicle (PV) segment witnessed healthy sales growth notching 8,73,501 units, up 19.91 percent YoY growth. However, the segment was badly hit by sharply escalating fuel prices and high interest rates all through Q2 (July-October 2018), caused majorly by the high year-ago base.
If PV manufacturers were expecting this festive season to boost their sales, their expectations may have been a tad too high. Vehicle sales in July (290,960 / -2.71%), August (2,87,186 / -2.46%) and September (2,92,658 / -5.61) saw growth being highlighted by a streak of red. Market segments were further impacted by factors such as mandatory bundled insurance premiums for up to five years, depreciation in the rupee value and rising fuel prices.
In normal circumstances, the buoyant festive month of October would have allowed the industry to achieve better growth. As it stands, sales moderated to settle at 2,84,224 units to rise marginally at 1.55 percent (October 2017: 2,79,837). Industry-registered cumulative PV sales of 20,28,529 units between April and October registered modest growth of 6.10 percent (April-October 2017: 19,11,883).
This resulted in most PV makers suffering a decline in their market share for the first seven months of the fiscal. Tata Motors, Toyota Kirloskar Motor and Maruti Suzuki India are the only key players to have maintained their performance and improved despite these troubled times.
Market leader Maruti Suzuki India has seen its sales moderate sharply in recent months. However, the company saw a growth in its PV market share – from being placed at 50.09 percent between April and October 2017 to 51.50 percent during the same period in the current year. The Indian brand emerged as the bellwether of the Indian PV industry. The company’s overall sales grew from 9,57,603 units in 2017 to 1,044,749 units for the seven-month period in the current fiscal. While such a performance slowed it down, the brand still looks well-placed to reach its 2 million annual sales target by the year 2020.
A robust performance by some of its key models made the company stick on a positive growth trajectory, even in a tough market. The latest-generation Swift and Dzire twins, as well as the Celerio and Baleno hatchbacks collectively garnered sales of 5,17,204 units between April and October, registering a growth of 21 percent (April-October 2017: 427,726) year-on-year (YoY).
Maruti’s UVs on the other hand, led by the Vitara Brezza (which was given a facelift in May) and also including the Gypsy, Ertiga and S-cross, remained majorly flat at 2 percent, bringing in cumulative sales of 1,50,633 units in the period (April-October 2017: 147,630). The company is now set to launch the new Ertiga MPV on November 21, 2018.
Meanwhile, a hard-charging Tata Motors has made notable progress over the last seven months – from 5.78 percent in 2017 to 6.84 percent between April and October this year. Its PV market share has grown on the back of its escalating sales, which reached 1,38,732 units (April-October 2017: 1,10,415).
Its Tiago hatchback and Nexon compact SUV have been major growth drivers for the carmaker. The entry-level Tiago and Tigor siblings registered a growth of 6.30 percent by going home to 81,498 buyers during the period. Meanwhile, the Nexon has catapulted the company into the fast lane, with a handsome 28.5 percent growth on the backs of 34,610 units. The stylish crossover has also aided Tata’s UV market share double – from being pegged at 3.80 percent between April and October 2017, the carmaker's share grew to 7.95 percent, year on year. In addition, Tata Motors has recently launched the power-packed JTP versions of its Tiago and Tigor twins, which promise fun-to-drive performance at a pocket-friendly price.
Toyota Kirloskar Motor – the Indian arm of Japanese carmaker Toyota – also saw its PV market share improve, albeit slightly. It sold 92,169 units between April and October, to get a hold on to 4.54 percent of the market (April-October 2017: 4.20% / 80,364 units). Meanwhile its May-launched Yaris sedan has sold a cumulative 9,810 units until October; but the car couldn’t lift off in a segment having fierce competition from the Honda City and the Hyundai Verna. Its highly popular Innova Crysta MPV (April-October 2018: 46,047) and the Toyota Fortuner SUV (April-October 20187: 12,966) have been the brand's key growth drivers. With sales of 8,828 units, Toyota’s Etios Liva hatchback has also registered a growth of 13.6 percent during the April-October period (April-October 2017: 7,769).
American marque Jeep (April-October 2018: 9,753) and Ford India (April-October 2018: 58,082) have both registered positive growth during the seven-month period under review. This has led to Jeep (operating under Fiat Chrysler Automobiles India) and Ford marginally enhancing their hold of the PV market segment in India to 0.48 and 2.86 percent respectively. On the flipside, Hyundai Motor India and Honda Cars India have lost market share.
The country’s second-largest PV maker by volume, Hyundai Motor India, saw an increase in sales with 326,178 units going home to buyers between April and October 2018 (April-October 2017: 314,052). However, its market share has slightly dipped from 16.43 percent during the same period last year to 16.08 percent in the current fiscal due to a bigger overall market size. While the Verna sedan recorded growth of 43.51 percent with overall sales of 25,293 units (April-October 2017: 17,624), Hyundai's Creta SUV registered an overall growth of 18.55 percent with overall sales touching 75,024 units (April-October 2017: 63,280). On the other hand, the Grand i10 and Elite i20 hatchbacks registered de-growth of 3.76 percent from 1,96,339 units in April-October 2017 to 1,88,953 units, on year. Hyundai now has high hopes for its recently launched third-generation Santro entry-level hatchback, which has already garnered over 30,000 bookings since October 10.
Honda Cars India also lost market share slightly, down from 5.52 percent between April-October 2017 to 5.36 percent. Due to an increased overall market size, though, Honda’s sales grew from 1,05,503 units last year to 1,08,652 units. The automaker's second-gen Amaze compact sedan (launched in May) has been an instant hit with buyers, surpassing the 50,000 unit mark in no time. Meanwhile, its prime product – the Honda City sedan – has had a slower take-off and has declined a substantial 37 percent, its sales reducing to 22,686 units (April-October 2017: 35,949).
With fuel prices being on the higher end of the spectrum and customer sentiment remaining mellow during the past festive season, the PV segment is only hopeful of good growth on the back of some of the much-anticipated new models which have been slated for launch early on in the coming year. While the industry could still move forward, how it fares in H2 of FY2019 depends on a lot of external factors like commodity, oil and insurance prices. Watch this space for more.