Though most carmakers posted yet another month of positive sales growth in February, clearly beating any demonetisation blues, the interesting trend to note is that the key determinant of sales is the frequency at which newer models are launched. Further, premium hatchbacks, mid-size cars and SUVs are driving the sales rather than entry-level, small cars.
For instance, the country’s largest carmaker Maruti Suzuki, which posted a 12% jump in its domestic sales during the month, saw its smaller cars — the Alto and WagonR — post a 7% decline. In the 11-month period between April and February this fiscal, these two cars have seen a decline in sales for eight of these months. Industry sources said that Maruti could have pushed sales of these cars but that would have entailed higher discounts, which does not make sense since its bigger cars are selling without much by way of discounts.
During April-February, volumes in the mini segment (Alto and WagonR) decreased 3.40 % year-on-year to 383,008 units. During the October-December quarter, Maruti’s volumes grew by 3.5% year-on-year but its net realisations increased by 9% due to higher sales of high-margin vehicles. The contribution of the mini or small car segment to Maruti’s revenues has fallen from 25.4% in 2014 to 20.2% in 2016, according to Kotak Institutional Equities, and will further decline to 15% by 2019.
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The country’s second largest carmaker, Hyundai Motor, saw domestic sales rising by 4%. This is largely because of a high base effect. It is almost two years since Hyundai launched its new vehicle Creta and a refurbished i20, which are still selling in high numbers, but the base effect has caught up. Honda Motors, which has seen declining sales for almost a year now, posted a jump of 9.4% in February. This can be attributed to the launch of a new City model in January. The company’s best-selling City was last refreshed in 2014.