ICRA said that the Utility Vehicles (UV) segment and the Vans segment have been the weakest performers for two consecutive months now, with volumes shrinking by 12.0 percent YoY and 23.7 percent YoY in Sep 2013.
The Passenger Car (PC) segment, however, recorded a marginal growth of 0.7 percent YoY supported largely by the steady volume traction of models such as the Maruti Suzuki Alto, Swift and Swift DZire, besides volume augmentation provided by new models viz., the Hyundai Grand i10 and the Honda Amaze.
The UV segment, which had grown by 52 percent in 2012-13 over the previous year, has been experiencing double-digit volume decline over the last three months caused by the high base of Q2 2012-13 (when volume run-rate of few new models was on the ascendency), as well as due to the dampening effect of other factors like an excise duty hike on SUVs and rising diesel prices.
Due to rise in input costs, several OEMs have announced price increases in Sep-Oct 2013.
Although discount levels too remain elevated, the net buying cost for customers has increased by 1.5-2 percent. However, ICRA expects pricing pressures on OEMs to increase post the festive season as PV demand may likely remain sluggish.
ICRA noted that the domestic two-wheeler (2W) industry recorded sales volumes of 1.3 million units in Sep 2013, a growth of 18.4 percent YoY.
This seemingly strong growth is attributable to the low base of Sep 2012 when the largest 2W OEM Hero MotoCorp had undertaken a sharp production cut to avoid build-up of channel inventory.
On a sequential basis, 2W sales volumes in Sep 2013 grew by 12.1 percent which was broadly in line with the uptick observed each year prior to the commencement of the festive season as OEMs look to have adequate channel stock.
In Sep 2013, the motorcycles segment volumes expanded by 17.4 percent YoY in stark contrast to the sluggish growth trends being experienced over the last 18 months.
Also, scooter volumes maintained their healthy growth run, expanding by 24.9 percent YoY in Sep 2013.
Hero MotoCorp, who commanded a share of 42.9 percent in the domestic 2W market in 2012-13, saw its share decline to 41.5 percent in 6m 2013-14 due to overall weakness in sales traction in the 100cc motorcycles segment which accounts for a bulk of the OEM's volumes.
On the exports front, the month of Sep 2013 recorded export volumes of 188,000 units, close on heels of a strong Aug month that had seen all-time high export volumes of 198,000 units.
ICRA noted that the domestic commercial vehicles (CV) industry sales ended with another month of depressed volumes with total CV contracting by 26.9 percent YoY (as 15.3 percent H1 FY14).
In comparison to the prior year, the slowdown in the current year has been sharper as demand for small commercial vehicles (SCVs), which have otherwise been growing at a steady pace, have de-grown by 9 percent in 6m 2013-14.
The demand contraction continues to be across the board with M and HCV (trucks) being affected the most, registering a drop 28.4 percent in volume sales during the same period.
Overall, M and HCV sales have been declining for almost 20 consecutive months, reflecting the impact of weak economic activity, subdued industrial activity (i.e. IIP grew by only 0.1 percent in YTD 2013-14) and as a result low freight/cargo availability.
In terms of market share, Tata Motors has gained some of its lost market share in the M and HCV (Goods) segment in H1 2013-14, while its market position has weakened in the LCVs (Goods) segment as slowdown has caught up with the sub 2t category where it commands a strong market share.
In contrast, the 2-3.5t segment has witnessed strong growth where M and M has a relatively strong market position with its wide portfolio of pick-up trucks.
Within the bus segment, VECV continues to grow well, benefitting from new model launches and expanding reach, notwithstanding the overall industry weakness.
According to ICRA, the domestic three-wheeler segment witnessed a decline of 5 percent YoY in Sept 2013 with slowdown visible in both the passenger carrier and goods carrier segments.
On the exports front, the demand for three-wheelers has been growing steadily for last several months, registering a growth of 30 percent in the first six months of the current fiscal.
The growth has largely been supported by growing demand for nearby markets of Sri Lanka, Bangladesh and parts of Africa.
The company informed that the tractor volumes (domestic + export) posted robust 32 precent YoY growth in Sep 2013, partly on account of dealer stocking, ahead of the festive season.
Turnaround in tractor sales since the start of the current fiscal is a result of recovery in demand from agri-segment on back of healthy monsoon precipitation throughout most parts of the country, sustained elevated minimum support prices of crops, and pent-up demand.
The industry's pace of growth had however slackened from the blockbuster growth in Apr 2013 (31 percent YoY), May (22 percent) and June (17 percent) to 9 percent each in Jul and Aug.
Volume growth (YoY) has seen a revival in Sep 2013 with the upcoming festive season
--IBNS (Posted on 16-10-2013)