How Tata now ranks 3rd in Indian Automobile Industry, Market Capture of more than 8%?

Due to the COVID-19 many sectors have been affected and one such sector is the Indian automobile industry. The overall year was challenging. This is mainly due to the festive season sales which did not occur. This is because of the expected fuel prices to rise tremendously during that period. There was also a non-availability of credit and the entire sentiment did not pull customers to the showroom to purchase new vehicles. There were also many statistics provided to support this view. The passenger vehicle sales was seen to be a single digit increase of 5.32 percent at 33,93,705 units as compared to 32,22,220 units in the year 2017.

However, the sales started to reduce in numbers after the devastating floods in Kerala. This was the biggest market for passenger vehicles then followed by Maharashtra. These numbers were further dampened by the high insurance pricing, liquidity crunch, and rising fuel costs.

During the period between June and October, the prices of petrol and diesel shot up by 14 per cent and 17 per cent respectively. This data was provided by the Petroleum Planning & Analysis Cell.

This then further led to the weak festive season sales which however, ended by early November during Diwali. During the 42-day long festive period, the sales of passenger vehicles dropped by a huge percent of 14, as per a report produced by the Federation of Automobile Dealers Association (FADA). The festive season is mostly considered as a prime sales time for automakers as about 30 percent of yearly car sales occur during this period of time.

Tata now ranks 3rd in Indian Automobile Industry

The Indian Automobile Industry has observed the lowest quarterly performance across all sectors and lowest monthly sales till now. However, the year to date numbers have shown an increase of 9.6 percent and the year 2018 has ended with a 13 percent increase in the face of growth in the 2W and CV segment. In addition to that the performance of PV in the first half or first two quarters has also increased. Alos, the year-end discounts have aided to show some recovery despite an overall decrease in December 2018. A little bit of easing of cost and favorable fuel price levels can increase the sentiments in the first quarter of 2019. These were the views of Mr. Sridhar V, Partner, Grant Thornton India LLP.

However, the market sentiment is likely to affect the few car developers as seven out of 16 carmakers noticed a positive growth. Out of these, the top four car producers are mainly Maruti Suzuki, Hyundai India, Mahindra and Mahindra, and Tata Motors. These companies are responsible for over 82 percent of the Indian passenger vehicle market.

As compared to all the largest gainers was Tata Motor this company has observed 24.13 percent growth at 2,37,217 units in the year 2018. This has recorded a market share of 7 percent from earlier 5.9 percent in the year 2017. The other companies that rode on the success of Nexon and Tiago.

While the biggest passenger vehicle producer is Maruti Suzuki which recorded 8.05 percent at 17,31,450 units. This is recorded as 51 percent market share in the year 2018. This was similarly seen in companies like Ford and Toyota that witnessed increases of 10.91% and 8.54%, respectively.

Despite these, the South Korean car producer Hyundai India which produced its much-awaited hatchback. While the company Santro noticed a slow growth of 4.30 percent at 550002 units in the year 2018. However, together with the increase, it also noticed a decline of 0.2 percent in market share to 16.2 per cent.

Tata now ranks 3rd in Indian Automobile Industry

However, on the other hand, the Japanese carmaker Honda Cars India started a high note on the robust sales of Amaze. This company noticed a decline of 2.18 percent. At the same time the luxury car market which consists of Mercedes Benz, BMW, Audi, JLR and Volvo stood at 40,340 units, noticing a growth of 3.4 percent.

The company Mercedes remained its dominance with 38.5 percent market share this was then followed by BMW which had 27.5 per cent in market share in the year 2018. Mercedes witnessed a slight decline of about one percent in the market share. However, BMW had noticed an increase in market share by 2 percent in the same year.

The weak purchasing sentiment was even noticed on the high-end of the spectrum for the luxury cars. The entire luxury car market however, saw a decline of 3.30 percent at 37,702 as compared to 38,989 in the year 2017.

There was maintenance of two-wheelers with a high growth rate. However, amidst low consumer sentiment throughout the sector, the two-wheeler component posted a double-digit increase in the year 2018. The two-wheeler local sales increased by 12.8 percent in the year 2018 at 21645169 parts compared to 19182688 parts in the previous year, 2017.

These growths came after overcoming the various challenges such as Kerala floods in August and IRDA’s orders. This is to increase the insurance premium of two-wheelers to five years at the time of purchase.

An increased insurance premium had placed a huge amount of burden on buyers. This has led to about 10-15 percent decline in the retail sellers of two-wheelers. On the other hand, the two-wheeler section recorded an increase of 12.83 percent at 21,645,160 units in the previous year. The domestic sales remained at 19,182,574 units in the year 2017.

India’s biggest two-wheeler producer (Indian Automobile Industry), Hero MotoCorp remained in its pole position last year at 7,824,067 units. This was seen at an increase of 11.4 percent as compared to 7,023,363 units in the preceding year.

However, even after selling the highest quantity, there was a slight dip in the market share of Hero MotoCorp from 36.7 percent a year ago in 2017 to 36.15 percent in the year 2018.

Similarly, second biggest two-wheeler makers Honda Motorcycle and Scooter India (HMSI) saw a minor decrease of 1 percent in market share over last year at 27 percent.

The increase in the amount of insurance premium placed a lot of burden on buyers. This had led to about 10-15% decline in the retail of two-wheeler sales. For the same domestic sales of HMSI, this increased 7.85 percent to 5,884,911 units in the period which was studied. TVS continued to remain at third with 3,151,097 units in the year 2018. This posted a growth of 16 percent as compared to 2,714,662 units in the calendar year 17. There has been no drastic increase in its market share.

When the two-wheeler market was studied, Bajaj Auto was the only manufacturer that had enhanced its market share to 11.23 percent in the year 2018 from 9.8 percent in the previous years. The company also noticed a strong double-digit growth which was around 28.5 percent to 2,428,813 units sold last year. The year before that, the domestic sales for Bajaj Auto was noticed at 1,890,529 units.

The company, Royal Enfield also noticed an increase of 11 percent in domestic sales at 837,669 units in the year 2018. This had however, failed to raise its market share.

The company, India Yamaha Motors was nearly close behind at 796,234 units which increased marginally at 1 percent while the Suzuki Motorcycles sold 627,991 units in the year 2018, an uptick of 35.18 percent.

However, the majority of two-wheeler makers saw a marginal rise. These were the Mahindra Two-wheelers, UM Lohia Two-wheelers and Harley Davidson Motor Company. These companies noticed a major decline in their quantities. While the company, Harley Davidson Motor Company recognised a 6 percent dip at 3,148 units.

Mahindra Two-wheelers matched it with sales of 5,197 declining 71 percent followed by UM Lohia Two-wheelers, which is still a fringe player and sold 2,628 units with a decline of 54 percent after selling approximately 5,753 units in the year 2017.

However, in the first quarter, the increase in motorcycles was mainly aided by the rural economy which drove up the growth by 22.7 percent in the below 110cc segment. With the assistance of the commencement of the second quarter, the volumes decreased partly due to the high base in the year 2018. There were capacity constraints and inventory correction by OEMs. According to FADA, the inventory in the two-wheeler region post in 2018 continued to remain at the higher side, that is approximately around 55-60 days.

This is despite the contending with a combination of headwinds like those revised axel norms and the NBFC challenge. The overall commercial vehicle sales showed a drastic 27.28 percent increase in the domestic market in the year 2018. The CV segment also surpassed one million sales mark for the first time in 2018 and was seen at 10,04,900 units. Indian Automobile Industry.



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