July 2019 Car Sales – Snapshot

Passenger Vehicle sales in India continued its downward spiral for the ninth consecutive month in July’19! The overall car sales fell below 2 Lakh units after a very long time. The Industry saw a volume of 1,99,534 units in July’19 v/s a sale of 2,86,397 units in July’18 and reported a massive YoY degrowth of 30.3%! This is an indicative of worsening purchases at the consumer end and poor dealership health at the channel end. There are no signs of the demand rejuvenating in the coming months. And if things don’t improve this coming festive season; this could probably be the worst phase in the Industry’s history! Adding to the owes is the lack of support from the Government – No GST reduction seen as well.

  • Maruti + Nexa sees the highest Market Share fall and lands at 48.4% Market Share in July’19 v/s 53.2% MS in July’18. Maruti in overall has seen a huge inventory correction at the dealership and the trend looks to continue in the coming months. The XL6 (beefed up Ertiga) shall be the new launch for Nexa  in Aug’19 and hope it gives some push to the OEM.
  • Hyundai has gained some serious hold this year. Generally Hyundai’s market share used to be 16% – However; it has slowly moved towards 19% and lot of this credit goes to Venue!
  • Mahindra is now the clear No.3 owing to success of XUV300. However; the OEM saw a YoY degrowth of -11%.
  • Tata, Toyota & Honda are placed 4th, 5th & 6th in the ranking table respectively. Do note the minimal gap in their respective volumes. Amaze’s fall in volumes has led to the drastic degrowth of -49% for Honda which is one of the highest in the Industry.
  • Following the trend, Renault numbers falls to less than 4k units. This is Renault India’s lowest figures in past 48 months! The last time Reanult had posted less than 4k units was in Sep’15 (1,781 units).
  • FCA is losing the game big time to the Harrier’s & Hector’s. Once upon a time Compass’s pricing looked attractive – however; the same car seems damn expensive. Jeep has definitely not caught on to the game with time.

Market Shares figures for July’19 –

Statewise Car Sales India – FY19

Sales Statistics of the States, Zone-wise:

  • 17,41,234 cars have been sold in the first six months of FY19; and 16,30,997 were sold in last six months of FY19! Usually the sales in last 6 months is higher; but owing to lower consumer sentiments Kerala floods led to the downward trend. Even the festive season couldn’t better the decelerating trend.
  • West Zone has emerged as the Top Zone and is significantly ahead than the North & South Zone which have been placed No.2 & No.3 respectively. Do note that South Zone was pushed to No.3 while it was placed in second position in H1 FY19 (Source).
  • The Zonewise Toppers are as mentioned: Maharashtra tops West Zone; Kerala for South; Uttar Pradesh for North & West Bengal for East.

Top Selling States Ranking:

  • Top 5 states contribute to 42.1% of national sales and Top 10 states contribute 69%!

June 2019 Two Wheeler Sales – Snapshot

The auto industry downturn affected the two-wheeler OEMs too and overall Two-Wheeler sales reported a fall of -11.7% in June’19 v/s June’18.  Industry leader Hero Moto Corp reported a decline of 13% in total volumes with 6,00,380 units sold in June 2019. In comparison, the manufacturer sold 6,89,949 units in June 2018. HMSI is reeling even severely from the economic downturn and the second largest two-wheeler manufacturer saw a dip of 15.8% in its total sales in June 2019 over June 2018. HMSI sold 4,50,889 units in June 2019 as compared to total sales of 5,35,512 units in June 2018.

It was only Suzuki Motorcycles which showed a YoY growth of 29% in June 2019. Suzuki posted 22% YoY increase by registering 57,023 unit sales, as compared to 46,717 units dispatched during June 2018.

June’19 Market Share of OEMs –

Recession in Indian Passenger Car Industry

Recession is defined as negative economic growth for two consecutive quarters. Most unfortunately, Indian passenger car industry is now going through a prolonged recession. Such recession has had happened in past as well. All recessions were due to poor consumer sentiments, arising due to few common factors :

  • All were triggered by rise in global crude oil price (2008, 2011, 2013 & 2018) & subsequent retail fuel price hike
  • Mostly in General Election run-up phase (linked to incumbent Government’s Performance)
  • Economic (GDP) growth slowdown either due to global or internal financial shock

But in most situations, they were contained by government’s fiscal and/or central bank’s monetary action, except 2013 one, which got corrected post formation of new Government in 2014.  On a side note, if you look at the line graphs carefully, international crude oil price movement has some sort of inverse relation with India’s GDP growth rate.

This time, despite formation of new government, recession continued, with double digit drop in last three months, much higher than earlier, ever, pointing to far grave situation. Central Bank’s (RBI) monetary easing (reduction in Repo Rate) has not helped much either, as banks saddled with NPA, are passively reluctant to reduce interest rate.

Upcoming festive season was the only hope left for any revival in 2019. For now, hike in tax on petrol and diesel in the budget presented on 5th July 2019, has left the industry highly vulnerable to any global crude price shock, as crude oil price is still in volatile phase.

With slowing economy (GDP growth of 5.8% in latest quarter & unemployment rate at 6.1%, highest in last four decades), clubbed with credit squeeze due to NBFC financial troubles, green shoots looks far too distant in 2019.

And in 2020, post BS6 emission norm implementation (1st April 2020), prices of all cars will go up, thus no hope of double digit growth till 2021. Or is it statistically possible, due to low base effect of 2019?

2019 H1 Analysis

Worse H1 performance since 2013.

Manufacturer-wise Analysis

Some companies still have posted better growth figures than the industry average.

But that is squarely due to the new launches, post H1 2018. Exception is of course – Fiat, and we don’t know how Fiat did this miracle!

If we remove the volume of new launches, result would have been similar to that of other players.

Every product in the market has had taken a hit, with different level of severity. However, there are some products which bucked the trend, and most notable is Tata Nexon.

Body style

  • Sedan : Segment is in free fall
  • Hatchback : Largely in line with industry trend
  • MUV : New Generation Maruti Ertiga and Mahindra Marazzo has fueled the growth
  • SUV : Though SUV seems least vulnerable, but it is not true. If we ignore new launches (XUV 300, Venue &  Harrier), since H2 2018, segment would have slumped by 17%, even worse than hatchback

(The article is written by Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)