Gainers Dwindle as India LV Sales Lose More Ground

MUMBAI – September was another dismal month for Indian automakers, whose combined light-vehicle sales fell 6.8% year-on-year to 254,588 units, according to WardsAuto data.

Last month’s retreat was in line with the 6.5% drop in year-to-date deliveries to 2.31 million units.

Only four of 19 automakers operating in the country showed growth last month, but Fiat India sold a mere 1,086 cars and market leader Maruti Suzuki managed only a 1.8% improvement over prior-year sales, depressed by weeks of labor unrest.

The remaining bright spots in this slumping market were Ford India and Honda India.

Ford registered 36.9% growth over like-2012, boosted by the 30,000 bookings received in only 17 days by its new EcoSport compact CUV. Ford sold 6,260 light trucks in September compared with just 100 prior-year, enough to turn a 43.1% plunge in car deliveries into a positive result.

The EcoSport’s success came at the expense of General Motors India’s Enjoy multipurpose vehicle, which saw deliveries slide 4.7%, and Renault’s compact Duster SUV, whose sales fell 13.5%.

Honda car sales soared 85.6% to 10,220 units to surpass the 9,766 delivered by India’s No.2 automaker Tata. Honda’s Amaze subcompact challenged Toyota Kirloskar’s Etios, Mahindra & Mahindra’s Verito and Tata’s aging Indica and Indigo.

Beyond Maruti Suzuki’s 1.8% uptick in September, combined light-vehicle deliveries by Tata, No.3 Mahindra and No.4 Hyundai were down 18.4% to 101,740.

Smaller-volume automakers’ sales fell as much as 40.2% by Skoda, followed by Nissan’s 34.2%  and Volkswagen’s 12.5%.

Stagnant sales are reflected in the lowering of the industry’s 5 million-unit plant capacity to 60%-65%. Profit margins have been thinned by large discounts and even larger incentives, forcing many automakers to put investment plans on hold.

Vishnu Mathur, director general-Society of Indian Automobile Manufacturers says the industry invested Rs270 billion ($4.4 billion) over the past four years. Investments lined up for the current year to add capacity of 1 million vehicles were Rs110 billion ($1.8 billion), but they are unlikely to materialize not only because of the market slowdown but also the rising cost of production.

The slowdown, however, has not completely stalled investment in modern technologies, planning for new products and long-term expansion strategies.

“Product-development investment is not affected,” says Pawan Goenka, Mahindra’s new executive director, “But fresh capacity investments may be on hold for a year or two as we look for new locations and decide to create capacity.”

Adds Jnanaeswar Sen, senior vice president-Honda India: “Tough times don’t last forever. There is enormous growth potential.”