Movers & Shakers
May 2012 saw an absolute bloodshed in the Indian auto industry with most manufacturers reporting a severe loss of sales. A quick look at some of the unfortunate happenings in the recent past:
- Petrol prices hiked by Rs. 7.5 / liter in May! It's hard to believe that the now-precious fuel cost only Rs. 44.55 (Mumbai) in January 2009.
- The Government increased excise duties on all cars in Budget 2012.
- The Rupee hits a record low of Rs. 56.52 to the US$, thereby increasing import cost for manufacturers.
- Earlier today, it was officially announced that India's annual GDP growth has slowed down to a 9-year low of 6.5%. This isn't the best time to buy big ticket items like cars.
You know times are bad when your email box is NOT filled with press releases announcing xx.xx% growth by the afternoon of the 1st. Challenging times indeed, and it will be a survival of the fittest. The weak will have to keep requesting $$$ from parent companies abroad and also face a drastic reduction in budgets. When the market is bad, does it make sense to increase or decrease advertising budgets? The jury is out on that one.
Interestingly, three manufacturers who have bucked the trend are Mahindra, Toyota & Honda. Honda overtakes arch rival VW after a long time.
I see motorcycle sales gaining at the cost of entry-level cars. After all, the first-time car buyer is now more concerned about his monthly petrol bill than the Maruti Alto / Hyundai Santro EMI!
- It looks unlikely that the Alto will reach its previous 30,000 / month level anytime soon. Remember, the entry-level segment is the most price sensitive. Maruti's best performers are cars that have been launched in the last 12 months and are powered by the 1.3L MJD diesel engine. The Swift & Dzire continue to go from strength to strength, while the Ertiga is gaining traction too. These three cars share the same platform...a platform that has managed a cumulative 45,000 units in May 2012! The Omni -
surprisingly unaffected by the petrol price hike - is the only other good news Maruti has. The WagonR, Eeco & Ritz lose sales share big time. Duds like the A-Star & Estilo reach new lows and the SX4 appears to be completely annihilated by the cheaper Ertiga.
- Hyundai's best selling hatchback is the i20, a car that had its highest sales month in a year (
link to official review). This goes to show that the 6 - 8 lakh customer isn't as affected by external market conditions as a 3 lakh buyer. The Eon, i10 & Santro -
petrol only hatchbacks - take a noticeable hit on volumes. The Verna continues to impress with its success in the C2 segment, but the Sonata is already showing signs of struggle. Might be time for the Accent to R-I-P soon (it's been a long run anyway).
- Say hello to the new No.3 in the Indian market, Mahindra! Just like Warren Buffett who frequently bucks the trend, the Bolero, Scorpio & XUV500 continue to laugh all the way to the bank. Bad market?
Whaaaaat? On the other hand, a facelift isn't doing anything to the Xylo's fortunes. Doesn't look like taxi drivers are out shopping either (ref = Logan sales dip).
- The Nano is the only Tata that has managed to retain its regular sales performance. The Indica, Indigo & Safari are severely affected by the negative market sentiment. Though, it could be that Safari production is being transferred to the Storme? The Aria's performance is shabby even by market dud standards.
- Toyota has reason to cheer in the grim market; the Innova, Fortuner (recording it's best-ever month btw) and Etios bring the volumes home. On the flip side, the Corolla & Liva have a rather mediocre run. The Liva, especially, will find it hard to sustain competitive pressures.
- Honda is the other manufacturer to swim against the tide and move up to position 6 overall. It has recorded substantial gains in its entire sub-10 lakh portfolio. The Jazz, written off even after the price cut, is now nudging the healthy 2,000 level. The Brio & City put up a strong show in a difficult month. It's 10+ lakh portfolio, however, provides ample learning on what NOT to do when you are at the top. The Accord, Civic & CRV are all relegated to the flop category. It is noteworthy to mention that these cars were once the No.1 in their respective segments. When times change and management styles don't, there is a price to pay.
- The only shining star in the Chevy universe is the Beat. The company would have been in serious trouble if it weren't for that 3-cylinder diesel engine saving the day. Every other Chevy car, including the once respected Spark, has had an entirely forgettable May. The Cruze suffers an inexplicable fall and we can only credit that to the updated Cruze being launched next month. Let's see whether June 2012 proves us right or wrong.
- Just like Chevy, Ford has a sole product - the Figo - to keep the cash registers ringing. The ol' Fiesta is sitting with 50% lesser sales than what it managed in the Jan - March 2012 period. The less said about the new Fiesta's performance, the better. Ford needs the EcoSport and fast. Hope it's priced well as there is a lot of interest in this compact SUV.
- VW records its lowest sales in a year and is said to be working furiously on solving the problem. The Passat outsells the Superb and the Vento beats the Rapid. But the Polo has dropped to the 2K level, and the Vento's numbers are nothing to write home about either. The Jetta records its second <200 month. VW's biggest challenge is Skoda selling nearly identical products with the same core competencies at noticeably lower prices.
- The Sunny has a reasonable run @ 2,500 units, but doesn't seem capable of getting back to the levels it held in the first quarter of 2012. The Micra suffers a massive slip to a paltry 500 units (outsold by even the Punto).
- The Rapid is Skoda's knight in shining armour. The company's engines are misfiring otherwise, with the Laura & Superb (one time cash cows) taking a noticeable dive due to market conditions (and not any product flaws). Cheaper Superb variant isn't working. The Fabia sells barely 20% of what it did in May 2011.
- Not much to talk about with the trio on the last bench (Fiat, HM & Renault). It's the same grim story as in earlier months. I'm quite surprised by Renault's lack of energy...when your brand is new, you just have to make an aggressive assault. The Pulse, in the 5th month of its life, hits a bottom of mere 300 cars sold. The company has a lot riding on the Duster which does have the potential to become a game-changer.