DeMo plays mixed bag for auto sector sales
While big players like Maruti, Hyundai, Mahindra and Ford have been hit hard post demonetisation, Toyota, Renault, Tata Motors, Volkswagen, and Nissan cheer good sales
Demonetisation has hit car sales of big players such as Maruti, Hyundai, Mahindra and Ford, while others such as Toyota, Renault, Tata Motors, Volkswagen, and Nissan reported good sales during December in Asia’s third biggest car market. Auto honchos and analysts say post demonetisation, it would take about two to three months for customer demand to return to normal.
Maruti Suzuki was the first to announce dip in sales by 4.4 per cent. Maruti’s domestic sales stood at 1,06,414 units in December, 2016 compared to 1,11,333 units in the same month the previous year as it saw its popular models Alto and WagonR reporting sharp decline in sales to the tune of 15.3 per cent. Korean carmaker Hyundai Motor India's sales declined 4.31 per cent to 40,057 units in December 2016 as against 41,861 units it sold in the same month last year. However, YK Koo, managing director and CEO at Hyundai Motor India was bullish. "In 2016, we celebrated 20 years in India, rolled out our 7 millionth car in November, crossed 5 lakh domestic sales and the fastest 50,000 unit sales in the month of October. The launch of all new Elantra and Tucson have created new benchmarks in their respective segments and setting trend brand in India," Koo said.
Passenger vehicles (comprising utility vehicles, cars and vans), sales at Mahindra & Mahindra, India’s largest utility vehicles maker by sales, whose large part of sales come from rural India, fell 8.24 per cent to 16,698 down 8.24 percent from 18,197 units a year ago. This comes on the back of its November 2016 numbers, which were down 33 per cent year-on-year basis.
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,” Pravin Shah, president and chief executive (automotive) at Mahindra and Mahindra, said.
However, there would be a gradual pick-up in demand starting next few months, he said. “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. I believe, this coupled with stable fuel prices and reduced inflation and interest rates, will fuel the automotive industry’s growth going forward,” Shah pointed out.
Wholesales at American brand Ford India also dropped 6 per cent last month to 5,566 units, down from 5,924 units it sold a year ago in the same month.
“Post demonetisation, it will take about two to three months for customer demand to return to normal in the Indian automotive industry. In order to ensure that there is no significant inventory buildup at the dealers, OEMs will likely offer attractive pricing and financing schemes,” Abdul Majeed, auto expert and partner at Price Waterhouse told Financial Chronicle.
Toyota Kirloskar Motor, however, was immune to the demonetisation as domestic sales of the carmaker went up by 22.03 per cent to 12,747 units in December 2016, up from 10,446 units it sold last year. The newly launched SUV Toyota Fortuner and the new multi-purpose vehicle Innova Crysta were the main growth drivers for the Japanese automaker.
“December is usually a high selling month as most manufacturers try and liquidate the year end stocks and come up with schemes offering huge discounts on products. In our case, we ensure a lean inventory at all times both on our side as well as the dealer and we have been able to maintain the same in the year-end as well. This indicates the strong demand in the market for our products, especially the demand for the new Crysta and Fortuner, which are new launches. Both these products have received an overwhelming response,” N Raja, director and senior vice president, sales & marketing at Toyota Kirloskar Motor, said.
However, the number of walk-ins at the dealership and enquiries have been impacted due to demonetisation in the past two months, he said. “Although we saw a slight surge in footfalls and customer enquiries in December, the effects of demonetisation will reflect until the first quarter of this year. We hope that the New Year will bring in positive sentiments in the market,” Raja said.
French carmaker Renault India, whose domestic sales were powered by the game-changing Kwid hatchback, reported a year-on-year growth of 9.2 per cent last month. It sold 11,244 units in December as against 10,292 units last year.
“India is a priority market and plays an important role in Renault’s international growth. In a short span, Renault has grown its presence exponentially, becoming one of the youngest and fastest growing automotive brands and the number one European brand in India,” Sumit Sawhney, country CEO and MD at Renault India Operations, said.
"We are on track with a 4.5 per cent market share at the end of 2016, achieving a robust three-digit growth over 2015. Our focus for 2017 will be to continue and build on our growth journey, reflecting our long-term commitment to the Indian market. 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,” he said.
Wholesales at Tata Motors, India’s biggest automaker by revenues, also increased 12.49 per cent to 10,827 passenger vehicles in December 2016, up from 9,625 units it sold in the previous year. The sales growth was primarily driven by its popular Tiago hatchback.
Volkswagen, Europe’s leading manufacturer, also reported a robust sales growth of 69 per cent, selling 4,348 units last month as compared to 2,577 units sold in the previous year. “With the launch of the made-in-India, made-for-India Ameo car attracted a new set of buyers and also won accolades for being the best sub-compact sedan in the category. The year also witnessed the launch of the most awaited GTI and new variants of the Polo and Vento. We look forward to 2017, as we gear up to introduce our global models in India,” Michael Mayer, director at Volkswagen Passenger Cars India, said.
Wholesales at Japanese Nissan Motor India also jumped 21 per cent to 3,711 units in December 2016, up from 3,065 units it sold last year. The carmaker has also reported that for the first three-quarters of the fiscal year 2016, combined Nissan and Datsun sales have registered 50 per cent year-on-year growth.
“Nissan India achieved healthy sales in December by posting 21 per cent year-on-year growth despite the challenges of the demonetisation issue. This strong performance came on the back of the continued success of the Datsun Redigo and the great customer response to the Redigo Sport. We have achieved consistently strong sales in the first three-quarters of this fiscal year. The growth we’ve achieved from April through December positions us as the second-fastest growing company in the passenger vehicle segment in India, a significant feat for a comparatively young company,” Arun Malhotra, MD at Nissan Motor India, said.
Michael Gonsalves