In December, the Indian auto industry witnessed a strong base effect, translating into robust growth for most manufacturers on a year-on-year (y-o-y) basis. On a sequential basis, most companies registered a decline in the volumes, largely driven by the fading effect of the festival season.
Maruti Suzuki India Ltd reported a 36.5% y-o-y rise in domestic volumes, driven by strong growth in C, A2 and A3 categories. The A2 segment, which accounts for over 70% of the total passenger car volumes, reported a robust growth of 41.8% y-o-y, backed by continued success of Ritz, A-Star and Swift. Although Maruti witnessed a strong growth in domestic volumes on y-o-y basis, it registered a fall on a sequential basis, a decline of 7% month-on-month (m-o-m) in domestic volumes.
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Utility vehicle (UV) volumes dropped 37.9% y-o-y, while C category (Omni and Versa) witnessed a surge of 51.2% y-o-y. Continued strong demand for the DZire model translated into 20.3% y-o-y rise in A3 category. The recent launch of SX4 acted as a growth catalyst in the segment. Exports of Maruti continue to grow with a jump of 223.7% y-o-y, the second highest export in a single month for Maruti.
Total automotive volumes for Mahindra and Mahindra Ltd (M&M) more than doubled with a growth of 125% y-o-y in December. The domestic market witnessed a rise of 121.9% y-o-y in the same period. The growth was led by the UV segment, which was up by 120% y-o-y, driven by the success of Xylo and the new variant of Scorpio. Volumes of three-wheelers and light commercial vehicles increased 145.4% and 118.1%, respectively. Logan volumes registered a mediocre growth of 13.2% y-o-y. Exports for M&M for December (1,247 units) were more than three times that of the corresponding month in the previous year.
Total volumes for Tata Motors Ltd rose by 104.7% y-o-y to 51,627 vehicles. The growth was led by continued recovery in commercial vehicles sales but was accentuated by a strong base effect. Passenger car volumes increased 53.7% y-o-y, registering a m-o-m fall of 30%. The growth in the passenger car segment was led by sales of Nano and Indigo range. The success in the Indigo range was backed by the astounding response on the recently launched Manza. Exports registered a growth of 160% y-o-y.
Among two-wheelers, Hero Honda Motors Ltd registered a growth of 74% y-o-y in the total volumes to 375,838 units. Sales of TVS Motor Co. Ltd were higher by 34.1% y-o-y led by 42.5% y-o-y jump in scooter and moped segment. Scooter and moped segment accounts for over 50% of the total volumes for TVS Motors. Motorcycle volumes rose by 23.7% on y-o-y basis and 9.9% sequentially.
The rapidity of growth in the automobile sector has been led by a strong bounce-back in the economy. Further, finance availability has improved substantially. However, the growth may not be sustainable, with expectations of interest rate hardening in the near term. The base effect might continue to keep growth numbers in the higher range, but absolute numbers would be of more importance. Poor monsoons may further affect volumes.
With commodity prices heading north, auto manufacturers are witnessing margin pressure and are planning to hike prices. This may affect the volumes on the negative side as all the pent up demand may have already been absorbed in the festive season.
Graphics by Yogesh Kumar/Mint