Passenger car sales for the month of July have reported a decline of 10% YoY. In the small car segment the worst hit has been Maruti Udyog which has reported a decline of 26% YoY. However others like Hyundai Motors and Daewoo Motors have reported buoyant growth rates on a year on year basis.
Telco's Indica too did not fare well as its volumes declined by 14% YoY from 4,189 cars in July-99 to 3,583 cars in July 2000. This is not very good news for the company as it delays the break even on its car project. The company was earlier expecting to break even on the Indica car project in the current year, however as it is unlikely to reach the target level of 90,000 vehicles per annum this will happen hopefully now in the next year.
Car sales for July decline
Maruti Udyog Ltd
Total car sales
In the mid sized segment, the Ford Ikon has done very well. In the month of July 2000 Ford India sold 1,502 cars, a growth of 397% YoY. General Motors too has reported a robust growth of 195% YoY.
While some players have done well, others have not. This can be attributed to not only a slowdown in the overall automobile segment but due to higher competition in the passenger car segment. With companies coming out with new models, adding features and price wars, competition is on the rise.
In the longer term as it will not be viable for all players to survive, consolidation in the Indian car market is bound to happen like it is happening globally currently.
The reasons for the slowdown in the passenger car market as is in other segments of the automobile industry in the current year, is imposition of uniform sales tax. However the future looks bright for the passenger car segment with lower interest rates, availability of attractive car finance schemes, improvement in the economy and pick up in the second hand car market. Price increases have been minimal in the small car segment as competition is intense, this should continue to spur the volume growth in this segment.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407