While two-wheeler sales were brisk and car sales fairly good, volumes of medium and heavy commercial vehicles, a proxy for the economy, were poor in May. Ashok Leyland reported a steep 18% year-on-year decline in M&HVC volumes, suggesting the economy remains sluggish and that fleet owners are in no hurry to buy trucks ahead of the roll-out of the goods and services tax and a shortage of components for BS IV engines. Ashok Leyland commands a 37% share of the M&HV market with Tata Motors having nearly 50%.
Motorcycle manufacturers did fairly well, an indication the rural markets may be looking up.
April had not been a good month given that in March, the ban on BS III vehicles had compelled some manufacturers to get rid of stocks at huge discounts.
Honda Motorcycles, in particular, reported a smart 23% jump in volumes in May riding on good demand for its automatic scooter Activa and executive segment motorcycle CB Shine. The Japanese firm is now the country’s second largest two-wheeler maker with a 57% share of the scooter market.
Watch this also:
Maruti’s premium models — the Baleno, Ignis, and Vitara Brezza — all clocked in good numbers and the small or mini car segment too fared well. The company has increased production of the Alto and WagonR at its Gurgaon and Manesar plants. Analysts say there has been some pick-up in demand in rural markets where Maruti sells a third of its volumes. The carmaker is tipped to emerge the biggest beneficiary of impending demand recovery, given its excellent product mix with a presence across segments.
Maruti’s new launches are targeted at filling gaps in its portfolio. The Maruti management in a post-results statement said the company could stretch manufacturing capacity to accommodate up to 12% volume growth this year.
The country’s second largest carmaker Hyundai has had a poor summer so far — wholesale volumes rose under 2 % year-on-year, hampered by capacity constraints at its plant in Chennai and few new models.
Apart from Maruti, Japanese carmaker Honda reported a 13.3% year-on-year increase on a low base. Ford Motor also reported a rise in wholesale dispatches, up 16.6% on an annualised basis but Toyota reported a 13.4% decline in volumes.
The heightened competition in the utility vehicle (UV) space saw Mahindra and Mahindra’s volumes stay muted, up just 3% year-on-year to 20,290 units. The company continues to hold some inventory of BS III vehicles which may be exported to the neighbouring and African markets.
“We have a market share of 30% in the UV space. Due to the entry of other players in this segment, it has been difficult to increase our market share. With one SUV expected this year, we plan to grow our market share by 1-2% very soon,” managing director Pawan Goenka said.
A gradual recovery in the rural market and the onset of the marriage season should see Hero MotoCorp continuing to do well, say analysts. In May, Hero reported an 8.7% rise in volumes. The Hero management expects sales momentum to remain strong in Q2FY18 as well.