Auto: Rupee fuels auto woes, brakes sales

Auto: Rupee fuels auto woes, brakes sales

Domestic sales for two big automakers tumbled in August on rising fuel costs and interest rates, and the industry looks set for more pain as a sharply weaker rupee hits profit margins during key sales months ahead.

The data comes after industry-wide car sales declined for nine straight months to July and as some automakers move to curtail production and reduce labour costs.

Tata Motors Ltd said local vehicle sales fell 33 per cent last month, while passenger car volumes at Mahindra and Mahindra Ltd, the country's largest sport-utility vehicle maker, slid 28 per cent.

Passenger vehicle sales at Maruti Suzuki India Ltd , the country's biggest carmaker by market share, doubled in August but that was mainly a reaction to a weak month last year when labour unrest resulted in a factory shutdown.

Ford India sales managed to hold steady at 11,065 vehicles in combined monthly domestic wholesales and exports in August 2013. The company had sold 10,352 cars during August 2012, recording a 7 per cent increase in August this year.

Anurag Mehrotra, vice-president of Sales for Ford India, said that sales were helped by significant customer interest in the recently launched urban SUV, the all-new EcoSport, which helped notch up Ford India’s second-best sales month so far this year. But domestic market sales still lagged on flagging demand. Ford India sold 8,008 wholesale units domestically in August this year, compared to 7,840 units in August 2012, recording a marginal 2 per cent increase in August.

Ashok Leyland (AL) witnessed a steep decline of 18.3 per cent on a monthly basis in total sales to 7,139 units led by the weak demand environment amidst slowdown in economic activity. While medium and heavy commercial vehicle (MHCV) sales posted a decline of 21.1 per cent in August, Dost sales posted a decline of 11.3 per cent during the month. On a year-on-year basis, total sales declined 24.3 per cent with MHCV and Dost sales falling 25.1 per cent and 22.4 per cent respectively.

Bajaj Auto recorded in-line volume growth of 11 per cent in August to 312,188 units led by a 12.9 per cent growth over July this year in motorcycle sales, primarily driven by the exports. Total exports surged sharply by 31 per cent in August. However, three-wheeler sales declined 2.6 per cent as sales continued to be impacted by the slowdown in Egypt. Domestic sales declined by 1.9 per cent due to weak demand for motorcycles. On a YoY basis, total sales declined 9.5 per cent, following domestic volumes declining 21.2 per cent.

Hero MotoCorp (HMCL) registered lower-than-expected volumes in August as volumes continue to be impacted by the slowdown in motorcycle demand and higher competition from Honda. Overall sales declined 5.7 per cent to 459,996 units in August. On a YoY basis, sales grew 3.6 per cent primarily due to the base effect.

Mahindra said it has let go about 1,000 temporary and contract workers over the past two months and would be observing up to six "no production" days per month at its automotive plants in the months ahead.

Maruti Suzuki is adjusting its number of temporary workers to reflect weak production but declined further details.

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