Car sales: Maruti Suzuki logs 16% growth; Baleno, Vitara Brezza, Dzire star performers; PV, UV sales down in May

Growth in the sales of both the passenger car and utility vehicle segment slowed down in May since most of the top car makers barring Maruti Suzuki registered low single-digit growth in wholesale dispatches mostly due to lack of new products and capacity constraints. Maruti Suzuki registered 15.5% y-o-y growth in May on the back of healthy demand for its new offering – Baleno, Vitara Brezza, Ignis and Dzire. Apart from the new offerings the wholesale volumes of Alto and Wagon R also increased in the first two months of the fiscal as a result of the revival of demand in the rural and semi urban markets. “We believe MSIL could emerge as the biggest beneficiary of impending demand recovery, considering its stronghold in the worst-impacted entry-level segment as well as favorable product lifecycle. MSIL’s new launches targeted toward filling gaps in its portfolio are likely to improve its overall product mix,” said analysts of Motlal Oswal in a report. Hyundai – the second largest car maker – registered just 1.6% y-o-y growth during the month due to lack of new products and capacity constraints in the Chennai plant. M&M on the other hand reported just 3% y-o-y increase in volumes due to intense competition from Maruti and Hyundai in the utility vehicle segment. Also the new products like TUV 300 and KUV 100 also did not deliver the expected volumes. “We have a market share of 30% in the UV space. Due to the entry of other players in this segment, it has been difficult to increase our market share. With one SUV expected this year, we plan to grow our market share by 1-2% very soon,” said Pawan Goenka, managing director, M&M. As result of revival of demand in rural areas post demonetisation, volumes in the motorcycle segment in June increased by 7.72% y-o-y to 10,60,746 units. Hero MotoCorp – country’s largest motorcycle manufacturer – registered 8.7% growth in wholesale volumes, which is the highest since November last year.

“We expect HMCL to benefit from recovery in rural demand in FY18. Retail sales trend remains strong with double digit growth during April-May, driven by strong wedding season demand. HMCL expects sales momentum to remain strong in Q2FY18 as well,” said analysts of Edelweiss in a report on the company. Chennai-based TVS Motors also reported a 16.3% increase in domestic volumes while HMSI – largest scooter manufacturer – saw volumes increase by a whopping 23% y-o-y increase in domestic volumes as a result of the high demand for scooters. Overall scooter volumes increased by 24% y-o-y to 5,63,326 units in May.

Due to substantial pre-buying after the Supreme court ban on BS3 vehicles in March volumes in the M&HCV segment continues to be affected declined by a whopping 33% y-o-y 1,67,716 units during the months. Both Tata Motors and Ashok Leyland lost significant volumes during the month as fleet owners don’t want to buy vehicles before the roll out of the Goods and services tax (GST). Volumes in the light commercial vehicle segment though increased by 14.32% y-o-y to 36741 units during the period.