Auto sales falter

After a scorching 26 per cent growth in each of the last two years, SIAM (Society of Indian Automobile Manufacturers) expects the auto industry growth to settle at a lower 12 per cent this year. If the first quarter is any indication, this moderation may well be on its way. In the April-June 2011 period, the auto industry has grown only at 15 per cent, as against the 29 per cent growth seen in the first three months of 2010-11. So, what are the segments showing initial indications of a slowing down?

Cars and CVs slowing

Passenger vehicles (cars and utility vehicles) and medium and heavy commercial vehicles (MHCVs) have been among the first to witness a moderation in volumes. As against the industry growth of 15 per cent in the June quarter over a year ago, these two segments have grown only by 8.7 per cent and 5 per cent respectively.

Specific pockets within the above segments, have already started registering lower volumes than last year. Among cars, volumes in the compact car segment (which constitute 40 per cent of the total cars sold), have dropped by 2.25 per cent year-on-year in the above period. The volumes of the Figo, Beat, UVA, Ritz, Swift, Estilo, Jazz, Indica and Indigo CS have all witnessed a decline.

Triggered by this drop, Ford, GM and Tata Motors have recorded a dip between 6 and 13 per cent in total cars sold during the first quarter. Maruti, despite the production shutdowns in June, has managed show a one per cent growth in volumes in this period. This could be because the company did better in the mini (Alto, Wagon-R and A-star), super compact (Dzire) and mid-size ( SX4) cars even though its compact cars slowed. A high base may be a reason for this slowdown in car sales, but rising interest rates may have also played its part in dampening the volumes.

The commercial vehicle segment also witnessed a drop in volumes in specific pockets. After record orders aided by the the JNNURM scheme during the last two years, a slowdown in passenger carriers (buses) is only to be expected. Yo-Y volumes here fell by about 7 per cent. Among goods carriers, it is the rigid vehicles in the 16.2-25 tonnes segment (which includes multi-axles) that have shown first signs of a decrease in volumes, dropping by 13 per cent in this quarter. Both Tata Motors and Ashok Leyland, the major players in the MHCV segment, have seen a drop in volumes in this segment. Besides, due to subdued demand from the South which is its major market, Leyland has seen 18 per cent Y-o-Y drop in overall volumes in the April-June 2011 period.

Bikes still strong

That said, it must be mentioned that there have been no specific signs of a slowdown for two-wheelers, LCVs and three-wheeled goods carriers yet. While overall two-wheeler growth, at 17 per cent, has marginally bettered industry growth, the growth in the 125-250 cc segment bikes has been faster at about 24 per cent. LCV goods carriers too, which are generally less affected by cyclicality, have continued to grow by a higher 27 per cent for the June quarter over a year ago.

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