Needle Barely Budges on India's August LV Sales

MUMBAI – A 15% surge in August new-car sales from year-ago tells only half the story of India’s auto industry struggles, as a 14.4% drop in light trucks left overall light-vehicle sales up just 0.8% to 228,039 units, according to WardsAuto data.

Last month’s result largely was skewed by Maruti Suzuki, which saw car sales spike 100.6% to 63,499 units even as light trucks tumbled 32.2% to 12,519.

The country’s biggest auto maker saw total LV deliveries climb 51.6%, but prior-year production was crippled by a strike that lasted more than a month.

All other auto makers saw sales decline in August except for Honda, up 62.9% to 8,913 units; Fiat, up 112.5% to 1,003; and Ford, up 1.7% to 8,008. Toyota Kirloskar fell 14.2% to 12,007 units; GM India slid 10.4% to 6,673; and combined deliveries of luxury marques Audi, BMW, Jaguar Land Rover and Mercedes-Benz declined 25.1% to 1,850.

While Maruti Suzuki experienced anomalous growth, combined LV deliveries by India’s three other top auto makers retreated 24.3% to 94,613 units. Tata saw sales decline 30.8% to 36,468; Mahindra & Mahindra slumped 18.4% to 29,834; and Hyundai managed a 0.1% uptick to 28,311.

The 0.8% gain in August LV volume recalls market conditions in 2010, when car and light-truck sales were growing at the same pace. Light-truck deliveries surged 48.9% in 2011 and 2012, while cars gained 7.7%.

While Tata long has been hobbled by an aging product lineup, but Mahindra’s result reflects the shrinking of light trucks’ popularity.  As most auto makers launched new-generation compact SUVs and cross/utility vehicles with improved comfort and performance this year, the light trucks that had performed solidly for Mahindra since the middle of the previous decade became outdated.

These new compacts also offer greater affordability. Even the four luxury auto makers have come forward with compacts and SUVs priced from Rs2.1 million-Rs2.5 million ($32,300-$38,500).

Every auto maker in India has been forced back to the drawing board amid changing customer preferences and a deteriorating economy. Besides developing new models, strategies to shore up sales include marketing in rural areas, increasing local content and exploring new export markets.

Rural India accounts for one-third of Mahindra’s Bolero and Scorpio sales. Maruti Suzuki says it has increased rural deliveries from 12% to 32% over the past year, while Hyundai expects its rural sales to climb from 16% to 20% in the current year.

WardsAutodoes not record exports, but Society of Indian Auto Manufacturers data shows overseas shipments increased 12.4% to 251,386 units from April through August compared with year-ago.

The weakening rupee against the U.S. dollar has made exports more attractive in that period, but the currencies of markets such as Indonesia, Malaysia, Thailand, Brazil and Mexico also have depreciated. Exporters nevertheless are offering discounts and other incentives.

Maruti Suzuki was the top exporter in August with 11,305 units, up 180.9% over like-2012, although its total for April through August was down 15.3% to 40,547. Hyundai shipped 120,108 vehicles to some 100 countries over that 5-month period, up 8.2%.

South Africa has been the most rapidly growing export destination for Indian auto makers. Shipments to the country are expected to exceed 60,000 units this year.

Many global auto makers are reviewing or revising their Indian investment plans as the country’s sales skid continues.