The automotive sectors performance is not dismal, but the past year has been a bit anticlimactic given how much the growth potential was talked about. Perhaps the excitement was a little ahead of time. The stock market is still optimistic, but numbers for the period July to Feb of this fiscal year do not call for any particular celebration.
Broadly, the auto sectortogether with passenger cars, jeeps, LCVs & tractorsregistered a growth of 3 percent year on year for 8MFY17 clocking at 175,500 units. The growth can be associated to the higher demand of trucks, buses and tractors. Passenger cars showed a decline compared to last year due to the Apni Rozgar Scheme that helped car sales surge during FY16. But to be fair, cars that were not part of the scheme are performing well this year.
Pak Suzuki Motor Company (PSMC) with its variants Bolan and Ravi showed decline of 44 percent and 47 percent respectively in 8MFY17. Because both variants did particularly well in January of this fiscal, they show a decline in February but keeping well within the average sales during this fiscal year. Suzukis star performer for a while has been WagonR that is fast gaining popularitysales grew by 80 percent in 8MFY17 and higher sales are being seen month after month.
Whether PSMC will introduce the replacement of the Cultus model (globally known as Celerio), and when, is still unclear, but the company has already stopped taking orders for the existing model of Cultus. The inventory will be sold out in the coming months. The company produced around 12,000 units of Cutlus during 8MFY17 and has sold out about 10,000 to date.
In other developments, the company launched a sedan; Suzuki Ciaz in competition with Honda City and base model Corolla, which for now is being imported in CBU form but after gauging market interest the company might start producing it locally.
Indus Motor Company (INDU) new Hilux-Revo is doing really well since its launch driven by the rising demand of pickups and LCVs. Fortuner sales jumped by 88 percent between Jan and Feb and overall growth during the period 8MFY17 is incredible. Honda Civic and Suzukis Ciaz in the category of Toyotas flagship Corolla are giving INDU a run for its money. Perhaps, Corolla fans are waiting for the model upgrade, which is an expectation.
As we have said earlier, Honda Atlas Cars (HCAR) is writing the real growth story here; slowly eroding Corollas share in the market and bolstered by PSMCs downtime lately. The three different civic models are the stars of the high-end 1300cc and above segment so far. One potential threat to Hondas popularity is the long delivery time (6 months) of its cars. Honda should not forget, service is everything.
So far, PSMC is the only carmaker of the three who announced sizeable investments into setting up a new plant and bringing out new models. But these plans may never see light of the day if the company cant reach an agreement with the government on comparable incentives, as given under the auto policy to new entrants. (For more on that, read our coverage of the sector over the past months).
Sales for trucks and buses, specially Isuzu have jumped up significantly (Read yesterdays story on trucks: Trucks revving it up published on Mar 15, 2017)43 percent in 8MFY17 year on year and selling at least 300 units more on monthly average this fiscal year compared to last.
Tractor demand driven by improved agricultural yield, which is itself bolstered by tax breaks and fertilizer subsidies contributed to a growth of 80 percent in sales during 8MFY17. Millat and Al-ghazi are still leading the game capturing bulk of the market.
All in all, it would seem hopes for the sector are high; and perhaps, deceptively sales numbers do not reflect that optimism- yet. But there is no doubt that the stage is being set, with new players entering not only in the car segment but also in the commercial vehicle segment. The sector is preparing itself for the long haul; and we must wait.
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