Passenger vehicle sales lose speed in July 2018

July 2018 proved to be a mixed month for carmakers in India. While Hyundai, Honda and Tata Motors posted a sales growth, Maruti Suzuki, Mahindra, Toyota and Ford witnessed a dip in volumes compared to the same month, last year. It must be noted the high numbers in July 2017 were an aberration, as sales spiked following the roll-out of the Goods and Services Tax, which saw a substantial, albeit temporary, reduction in prices. July 2017 had seen overall passenger vehicles sales soar to 2,98,997 units – up 15.12 percent than July 2016.

Maruti Suzuki registered cumulative domestic sales of 1,52,427 units, recording de-growth of 0.6 percent, year-on-year (July 2017: 153,298. The minor dip in sales comes after months of sustained growth for India’s largest carmaker that has set itself a target to achieve two million annual volumes by 2020. Key drivers to Maruti’s volumes in the month were the Swift and the Dzire siblings, as well as the Baleno premium hatchback, which has surpassed the 4,00,000-unit sales milestone since its launch in October 2015. Combined with the Ignis and the Celerio, the five compact cars collectively went home to 74,373 buyers, growing 17.8 percent (July 2017: 63,116). Of these, however, the Swift and the Dzire remain the top grossers with the hatchback and the compact sedan siblings in their latest third-generation avatar having become hot customer favourites in their respective segments.

Its utility vehicle sales, on the other hand – coming on the back of Gypsy, Ertiga, Vitara Brezza and the S-cross – slumped marginally, with overall sales clocking 24,505 units (July 2017: 25,781). The decline insinuates a likely production shift (to better manage the strong initial demand for the new Swift) and also stability in sales – especially of the Vitara Brezza, which contributes to over 60 percent of the company’s total UV volumes.

Hyundai Motor India sold 43,481 units in July 2018 – a 1.1 percent growth over July 2017. The Korean carmaker has been seeing consistent demand for its i20 hatchback and Creta SUV, and has recently unfolded a new future model strategy, eyeing the introduction of eight new products in the country by 2020, including EVs. The company also announced an expansion of its plant's production capacity from the current 7,00,000 units to 7,50,000 units annually.

UV major Mahindra & Mahindra saw its sales decline to 19,781 units, from 21,034 units sold last year.  “The auto industry has been subject to certain uncertainties with the truckers strike and sluggishness on the retail front which has impacted the passenger vehicle segment,” said Rajan Wadhera, president, Automotive Sector, M&M said in a company statement. “As we move into the festive season, we are confident of seeing a turnaround in the overall buying sentiment, coupled with the just- announced Mahindra Marazzo, which is scheduled for launch next month.”

In an otherwise scenario of low growth, Japanese carmaker Honda had its best-ever July yet. They carmaker sold 19,970 units in the month, growing a notable 17 percent (July 2017: 10,180), primarily on the back of good demand for the recently launched, second-generation Honda Amaze compact sedan. The Amaze’s sales of 10,180 units in July 2018 were the highest ever monthly sales figures for a Honda car in India.

Tata Motors had a good month, too, registering a 14 percent growth in domestic sales in July with volumes totalling 17,079 units. The carmaker has said that the strong demand for models such as the Tiago, Tigor, Hexa and Nexon has boosted volumes. The recently launched Nexon AMT has received an overwhelming response and is witnessing good traction in the market. According to a company statement, "While Tata Motors will maintain cautious optimism in the market, it will continue to focus on its Turnaround 2.0 strategy."

Toyota’s sales stood at 13,677 units, recording a substantial decline of 23 percent over the July 2017 numbers of 17,750 units. The company largely remains a UV player, with its Innova Crysta MPV and the Fortuner SUV offerings contributing to the bulk of its volumes. The company has seen volumes of the Innova grow 21 percent between June and July 2018.

American carmaker Ford registered cumulative domestic sales of 7,816 units in July – a degrowth of 7.15 percent (July 2017: 8,418). Despite its introduction of the Freestyle in April, the company still garners majority of its domestic volumes through the EcoSport compact SUV. Anurag Mehrotra, president and managing director, Ford India said the transport strike had an impact on both production as well as shipment of Ford vehicles in July.

From a volumes perspective, the industry is following a solid trajectory and also looks set to continue on its path. However, the lower year-on-year growth rates could still prevail in the coming months as well, given that the impact of GST on vehicle volumes created a ripple effect that lasted for a few months after July 2017.