PV sales stable even as race for leadership in exports intensifies
Sales of passenger vehicles in India rose 8.63% in May from a year earlier, albeit pace of growth slowed from the previous month when the sales grew 14.68%, according to data provided by Society of Indian Automobile Manufacturers or Siam.Passenger vehicles sales grew to 2.51 lakh units in May from 2.31 lakh units in the year ago period.
Siam said that it is not concerned about the slow growth in May and expects sales to pick up on the hopes of bountiful rains.
The Indian Meteorological Department (IMD) and private forecaster Skymet have predicted a normal and well distributed monsoon, which is expected at 96% ± 5% of the long period average.
Significantly, sales numbers during April and May have highlighted two broad changes that has started to happen in the world’s fastest growing auto market.
First, Hyundai for the first time and for two consecutive months has lost tag of country’s largest exporter to American car maker Ford India Pvt. Ltd.
Second, Honda Motorcycles that started its full blown sales exercise in 2011 now lags behind market leader Hero MotoCorp Ltd only by 1.36 lakh units during the first two months of this fiscal. As the year unfolds, the fight for market leadership in both PV export and domestic two-wheeler market will intensify.
“Scooters, which were largely an urban phenomenon, have started to sell in semi-urban areas also. This kind of sales is happening largely due to one model (Honda Activa), which is dangerous since this has not been seen anywhere in the world,” Sen said.
As much as 66% of Honda’s total sales (1,062,113 units) during April and May have come from scooters and a majority of the Honda scooters sold are Activas. On the other hand, Hero continues to dominate the motorcycle market, which has slowed down largely due to tepid growth in the rural economy over the past few years. Of 1,198,674 units that Hero sold during April-May, only 134,308 units were scooters. A person who is aware of Hero’s plans on condition of anonymity said that Hero was facing supply constraints of certain parts made by Gurgaon-based Omax Auto, which has led to Honda bridging the gap with the market leader.
“Honda’s stated ambition is to go for market leadership. They are going into that direction. It is never easy though,” said Rakesh Batra, partner, EY.
“Going forward, it will be little tougher as they have only rode the wave of scooters. From now on, the key will be how good are their motorcycles,” Batra said, adding that expectations are that the rural market will revive and in that case “Hero will benefit”.
That’s the area that Honda needs to get right, he added.
Sales of two-wheelers grew 11.89%, after months of sluggish growth, to 1.69 million units in May. On the export front, Hyundai is no longer India’s largest car exporter as it continues to cut down on production for exports to meet domestic demand.
During April-May, it exported 19,867 units, trailing Ford India which shipped 34,292 units.Ford, along with Volkswagen India Pvt Ltd, Nissan India Pvt Ltd and General Motors India Pvt Ltd, has tweaked its strategy to focus on exports to make its India business operationally sustainable. Meanwhile, sales across segments are expected to heat up if country receives a good monsoon and once the GST rollout settles down.
“We feel that if monsoon is good, we will have a good growth and that should also reflect in the sales of two-wheelers and commercial vehicles,” Sen said, adding that several factors have aligned to make the upcoming festival season a good period for the purchase of vehicles.
Sales of commercial vehicles declined 6.36% in May to 53,457 units.