AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

August 2019: Downturn continues…
Automobile Sales Volume Analysis
% Chg YTD % Chg
Company Name Vehicle Type Aug-2019 Aug-2018 Jul-2019 YoY MoM FY20 FY19 YoY FY19
Ashok Leyland MHCV 5,349 13,158 6,722 -59% -20% 38,790 54,801 -29% 1,42,862
LCV 3,882 4,228 4,205 -8% -8% 20,976 19,912 5% 54,508
Total 9,231 17,386 10,927 -47% -16% 59,766 74,713 -20% 1,97,370
Atul Auto 3W 3,681 4,430 3,272 -17% 13% 17,467 18,853 -7% 50,049
Bajaj Auto 2W 3,25,300 3,62,923 3,22,210 -10% 1% 17,30,137 17,25,567 0% 42,36,873
3W 64,726 74,169 59,320 -13% 9% 2,88,593 3,38,509 -15% 7,82,630
Total 3,90,026 4,37,092 3,81,530 -11% 2% 20,18,730 20,64,076 -2% 50,19,503
Eicher Motors 2W (RE) 52,904 69,377 54,185 -24% -2% 2,90,678 3,63,801 -20% 8,26,098
CV (VECV) 3,538 6,069 4,048 -42% -13% 20,917 28,360 -26% 72,969
Escorts Tractors 4,035 4,812 4,860 -16% -17% 29,946 34,916 -14% 96,412
Force Motors SCV & LCV 1,194 1,142 1,675 5% -29% 6,898 7,284 -5% 16,211
UV, SUV & Tractors 777 941 876 -17% -11% 3,736 4,295 -13% 11,392
Total 1,971 2,083 2,551 -5% -23% 10,634 11,579 -8% 27,603
Hero Motocorp 2W 5,43,406 6,85,047 5,35,810 -21% 1% 29,22,136 34,69,858 -16% 78,20,745
M&M PV 13,507 19,758 16,831 -32% -20% 89,738 1,00,318 -11% 2,54,701
CV 14,684 20,326 15,969 -28% -8% 82,247 96,550 -15% 2,48,601
3W 5,373 5,289 4,674 2% 15% 23,183 23,834 -3% 66,699
Domestic 33,564 45,373 37,474 -26% -10% 1,95,168 2,20,702 -12% 5,70,001
Exports 2,521 2,951 2,668 -15% -6% 12,748 14,922 -15% 38,595
Tractors 14,817 17,785 19,992 -17% -26% 1,21,159 1,41,248 -14% 3,30,436
Total 50,902 66,109 60,134 -23% -15% 3,29,075 3,76,872 -13% 9,39,032
Maruti Suzuki PV 1,06,413 1,58,189 1,09,264 -33% -3% 6,18,271 8,13,037 -24% 18,62,449
SML Isuzu CV 677 744 857 -9% -21% 5,816 6,028 -4% 13,658
Tata Motors MHCV 5,340 12,715 5,465 -58% -2% 37,249 60,924 -39% 1,51,105
ILCV 3,152 5,260 3,167 -40% 0% 18,472 21,027 -12% 56,996
SCV 11,082 17,426 10,937 -36% 1% 63,804 80,100 -20% 2,06,393
Comm. PC 2,250 4,458 2,884 -50% -22% 19,686 24,267 -19% 54,198
CV - Domestic 21,824 39,859 22,453 -45% -3% 1,39,211 1,86,318 -25% 4,68,692
PV - Domestic 7,316 17,351 10,485 -58% -30% 54,746 87,367 -37% 2,09,074
Total 29,140 57,210 32,938 -49% -12% 1,93,957 2,73,685 -29% 6,77,766
JLR - Global 39,615 42,658 41,783 -7% -5% 1,99,948 2,09,225 -4% 5,65,306
TVS Motor 2W 2,75,851 3,30,076 2,65,679 -16% 4% 14,25,150 15,30,686 -7% 37,57,329
3W 14,604 13,141 13,786 11% 6% 67,915 61,984 10% 1,56,434
Total 2,90,455 3,43,217 2,79,465 -15% 4% 14,93,065 15,92,670 -6% 39,13,763
VST Tillers Tractors Power Tillers 1,437 1,646 2,880 -13% -50% 9,342 9,611 -3% 22,547
Tractors 813 517 719 57% 13% 3,219 3,213 0% 8,198
Total 2,250 2,163 3,599 4% -37% 12,561 12,824 -2% 30,745
Source : Company & Almondz Research

Production – YTD production volumes at 12.02 Mn units vs 13.70 Mn units during the same
period last year (de-growth of 12.3% yoy)
Domestic Sales volumes –
PV – YTD Sales volumes declined 23.5% yoy (Passenger Cars de-grew 29.4% yoy, UV de-grew
6.3% yoy & Vans de-grew 34% yoy)
CV – YTD Sales volumes declined 19% yoy (MHCV de-grew 29% yoy & LCV de-grew 12.7% yoy)
3W – YTD Sales volumes declined 7.3% yoy (Passenger Carrier de-grew 7.3% yoy & Goods Carrier
de-grew 7.6% yoy)
2W – YTD Sales volumes declined 14.9% yoy (Scooters de-grew 17% yoy, Motorcycles de-grew
13.4% yoy & Mopeds de-grew 20.4% yoy)
Export Sales Volumes – YTD Sales volumes grew 1.4% yoy (PV grew 4.1% yoy, 2W grew 4.5% yoy , Rishubh Vasa
CV de-grew 44.4% yoy & 3W de-grew 12.4% yoy) Tel: 91-22-67526646
Source: SIAM Email: rishubh.vasa@almondz.com

Date – 11 September 2019 1

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

Ashok Leyland [CMP – INR 64 / MCAP – INR 187 bn]
 CV - Sales volume were down 47% yoy at 9,231 units. 4th consecutive month of decline in YoY volumes.
 Domestic CV volumes growth contracted 50% yoy at 8,296 units and Export CV volumes rose 23% yoy at 935 units.
 MHCV segment sales volume declined 59% yoy at 5,349 units.
 LCV segment sales volumes fell 8% yoy to 3,882 units.
YTD Performance –
 Total CV sales volumes were down 20% yoy at 59,766 units with 29% yoy contraction in MHCV and 5% yoy growth in LCV.
 Domestic CV volumes were down 18% yoy at 56,401 units and Export CV volumes fell 42% yoy to 3,365 units.
Updates –
 Ashok Leyland becomes the 1st lndian CV maker to get BS-VI certification for its Full Range of Heavy Duty Trucks from
Automotive Research Association of lndia. Compliance in the LCV and ICV range will be completed shortly and company will
offer a comprehensive range from 70 hp to 360 hp in BS-VI application.
 Ashok Leyland announces non-working days at manufacturing facilities in September. Company announced 16 non-working
days for its facility in Ennore, 5 days at Hosur (Tamil Nadu) unit, 10 days each in Alwar (Rajasthan) and Bhandara
(Maharashtra) unit and 18 days in Pantnagar (Uttarakhand) facilities due to continued weak demand.

Atul Auto [CMP – INR 231 / MCAP – INR 5 bn]

 3W - Sales volume declined 17% yoy at 3,681 units. 4th consecutive month of drop in YoY volumes.
YTD Performance –
 Total 3W sales volumes declined 7% yoy at 17,467 units.

Bajaj Auto [CMP – INR 2,896 / MCAP – INR 838 bn]

 2W+3W - Sales volume contracted 11% yoy at 3,90,026 units. 2nd consecutive month of decline in YoY volumes.
 Domestic volumes declined 19% yoy at 2,08,109 units whereas Export volumes were flat at 1,81,917 units.
 2W sales volumes were down 10% yoy at 3,25,300 units. Domestic volumes contracted 21% yoy & Exports were up by 5%
yoy.
 3W sales volumes fell 13% yoy at 64,726 units. Double digit yoy decline continues for the 5th consecutive month.
Both Domestic & Export volumes contracted 6% and 20% yoy respectively.
YTD Performance –
 Total 2W+3W sales volumes were down 2% yoy at 20,18,730 units with flat growth in 2W & 15% yoy decline in 3W.
 Domestic volumes were down 6% yoy at 11,10,732 units and Export volumes were up 3% yoy at 9,07,998 units.

Date – 11 September 2019 2

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

Eicher Motors [CMP – INR 17,012 / MCAP – INR 464 bn]
th
 2W - Sales volume de-grew 24% yoy at 52,904 units. 10 consecutive month of decline in YoY volumes.
 Domestic volumes declined 28% yoy at 48,752 units and Export volumes surged 205% yoy at 4,152 units.
YTD Performance –
 Total 2W sales volumes were down 20% yoy at 2,90,678 units.
 Domestic volumes dipped 23% yoy at 2,72,364 units and Export volumes surged 103% yoy at 18,434 units.

VE Commercial Vehicles
 CV – Sales volumes dipped 42% yoy at 3,538 units. 4th consecutive month of double digit decline in YoY volumes.
 Total Eicher Trucks & Buses sales volumes dipped 42% yoy at 3,462 units with contraction in both Domestic & Exports of 35%
and 71% yoy respectively.
 Total Volvo Trucks sales volumes were down 37% yoy at 76 units.
YTD Performance –
 Total CV sales volumes were down 26% yoy at 20,917 units.
 Total Eicher Trucks & Buses sales volumes dipped 26% yoy at 20,597 units with both Domestic & Exports falling 21% and 61%
yoy respectively.
 Total Volvo Trucks sales volumes were down 13% yoy at 320 units.

Escorts [CMP – INR 531 / MCAP – INR 65 bn]

 Tractors – Sales volumes were down 16% yoy at 4,035 units. 5th consecutive month of double digit decline in YoY volumes.
 Domestic sales volumes fell 20% yoy at 3,763 units and Export sales volumes are up 97% yoy at 272 units.
YTD Performance –
 Total Tractors sales volumes were down 14% yoy at 29,946 units.
 Domestic sales volumes dipped 17% yoy at 28,390 units and Export sales volumes are up 90% yoy at 1,556 units.

Force Motors [CMP – INR 1239 / MCAP – INR 16 bn]

 SCV/LCV/UV/SUV/Tractors – Sales volumes were down 5% yoy at 1,971 units. 13th consecutive month of decline in YoY
volumes.
 Domestic sales volumes were down 7% yoy at 1,930 units and Export sales volumes surged 242% yoy at 41 units.
 SCV/LCV segment volumes were up 2% yoy at 1,194 units whereas UV/SUV/Tractors volumes dipped 17% yoy at 777 units.
 Production volumes are up 5% yoy at 2,371 units. This is the 2nd consecutive month of increase in YoY production.
YTD Performance –
 SCV/LCV/UV/SUV/Tractors – Sales volumes were down 8% yoy at 10,634 units.
 Domestic sales volumes were down 8% yoy at 10,207 units and Export sales volumes dipped 9% yoy at 427 units.
 SCV/LCV segment volumes were down 5% yoy at 6,898 units whereas UV/SUV/Tractors volumes dipped 13% yoy at 3,736
units.
 Production volumes are down 4% yoy at 10,802 units.

Hero MotoCorp [CMP – INR 2,761 / MCAP – INR 551 bn]

rd
 2W – Sales volumes dipped 21% yoy at 5,43,406 units. 3 consecutive month of double digit decline in YoY volumes.
YTD Performance –
 Total 2W sales volumes were down 16% yoy at 29,22,136 units.

Date – 11 September 2019 3

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

Mahindra & Mahindra [CMP – INR 546 / MCAP – INR 678 bn]
 Total (Automobiles + Tractors) sales volumes were down 23% yoy at 50,902 units.
 Automobiles sales volume down 25% yoy at 36,085 units and Tractors sales volumes down 17% yoy at 14,817 units.
 PV sales volumes de-grew 32% yoy at 13,507 units. UV segment fell 27% yoy at 13,037 units while Cars & Vans segment
volumes fell 75% yoy at 470 units.
 CV sales volumes were down 28% yoy at 14,684 units. LCV segment de-grew 25% yoy at 14,330 units and MHCV segment
volumes fell 69% yoy at 354 units.
 3W sales volumes were up 2% yoy at 5,373 units.
 In Automobiles, Domestic volumes declined 26% yoy at 33,564 units and Export volumes were down 15% yoy at 2,521 units.
 In Tractors, Domestic volumes contracted 15% yoy at 13,871 units and Export volumes were down 33% yoy at 946 units.
YTD Performance –
 Total (Automobiles + Tractors) sales volumes were down 13% yoy at 3,29,075 units.
 Automobiles sales volume down 12% yoy at 2,07,916 units and Tractors sales volumes down 14% yoy at 1,21,159 units.
 PV sales volumes were down 11% yoy at 89,738 units. UV segment were down 7% yoy at 85,135 units while Cars & Vans
segment de-grew 46% yoy at 4,603 units.
 CV sales volumes were down 15% yoy at 82,247 units. LCV segment de-grew 13% yoy at 79,660 units and MHCV segment de-
grew 50% yoy at 2,587 units.
 3W sales volumes were down 3% yoy at 23,183 units.
 In Automobiles, Domestic volumes declined 12% yoy at 1,95,168 units and Export volumes dipped 15% yoy at 12,748 units.
 In Tractors, Domestic volumes contracted 14% yoy at 1,15,958 units and Export volumes were down 12% yoy at 5,201 units.
Management View –
 Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, Mahindra & Mahindra Ltd. said, “The auto industry
continues to be subdued in the month of August due to several external factors. We are optimistic and hopeful of a good
festive season going ahead”
 Rajesh Jejurikar, President - Farm Equipment Sector, Mahindra & Mahindra Ltd. said, “The improved monsoon spread and
sowing pattern for the Kharif crop is likely to help boost rural sentiment going into the festive season. The recently announced
fiscal measures by the Government may also provide the necessary stimulus for tractor demand uptick.”

Maruti Suzuki [CMP – INR 6598 / MCAP – INR 1993 bn]

 PV/LCV - Sales volume were down 33% at 1,06,413 units. This is the 5th consecutive double digit decline in YoY volumes.
 Domestic sales volumes were down 34% yoy at 97,061 units and Exports sales volumes were down 11% yoy at 9,352 units.
 Domestic PV segment de-grew 36% yoy at 93,173 units. Domestic PC segment de-grew 42% yoy at 65,993 units, Domestic
UV segment grew 3% yoy at 18,522 units and Vans segment de-grew 37% yoy at 8,658 units.
 Domestic LCV segment were down 14% yoy at 1,555 units.
 Sales to other OEM in the Compact segment was at 2,333 units from 1,796 units reported last month.
 Production volumes were down 34% yoy at 1,11,370 units vs 25.2% yoy cut in production reported last month.
 PV production stood at 1,10,214 units as against 1,66,161 units in August 2018, a decline of 33.6%. Production of mini and
compact segment cars including Alto, New WagonR, Celerio, Ignis, Swift, Baleno and Dzire stood at 80,909 units as against
1,22,824 units in August last year, down 34.1%. Production of UV such as Vitara Brezza, Ertiga and S-Cross declined 34.8% to
15,099 units as compared with 23,176 units in the year-ago month. Mid-sized sedan Ciaz saw its production reduced to 2,285
units in August from 6,149 units in the same month last year. LCV Super Carry's production was also trimmed to 1,156 units
from 2,564 units in August 2018.
YTD Performance –
 PV/LCV - Sales volume were down 24% at 6,18,271 units.
 Domestic sales volumes were down 25% yoy at 5,71,548 units and Exports sales volumes were down 1% yoy at 46,723 units.
 Domestic PV segment de-grew 27% yoy at 5,53,068 units. Domestic PC segment de-grew 29% yoy at 4,09,253 units,
Domestic UV segment de-grew 14% yoy at 92,684 units and Domestic Vans segment de-grew 31% yoy at 51,131 units.
 Domestic LCV segment grew 17% yoy at 9,855 units.
 Sales to other OEM in the Compact segment was at 8,625 units.
 Production volumes were down 21% yoy at 6,55,409 units.

Date – 11 September 2019 4

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

SML Isuzu [CMP – INR 630 / MCAP – INR 9 bn]
 CV – Sales volume dipped 9% yoy at 677 units. This is 3rd consecutive decline in YoY volumes.
YTD Performance –
 CV – Sales volume were down 4% yoy at 5,816 units.

Tata Motors [CMP – INR 134 / MCAP – INR 388 bn]

 CV+PV - Domestic CV volumes dipped 45% yoy at 21,824 units. 5th consecutive month of decline in YoY volumes.
 Domestic PV volumes were down 58% yoy at 7,316 units. 6th consecutive month of double digit decline in YoY volumes.
 JLR Global wholesales were down 7% yoy at 39,615 units. This decline is seen after 2 consecutive months of double digit YoY
volume growth.
 Tata Motors Group’s Global wholesales were down 32% yoy at 72,464 units. 10th consecutive month of decline in YoY
volumes.
 Global CV+Daewoo sales volumes were down 45% yoy at 25,366 units & Global PV (incl. JLR) sales volumes were down 23%
yoy at 47,098 units.
YTD Performance –
 CV+PV - Domestic CV volumes dipped 25% yoy at 1,39,211 units.
 Domestic PV volumes were down 37% yoy at 54,746 units.
 JLR Global wholesales were down 4% yoy at 1,99,948 units.
 Tata Motors Group’s Global wholesales were down 20% yoy at 4,08,864 units.
 Global CV+Daewoo sales volumes were down 27% yoy at 1,53,596 units & Global PV (incl. JLR) sales volumes were down 14%
yoy at 2,55,268 units.
Management View –
 Girish Wagh, President, CV Business Unit, Tata Motors Ltd said, "Subdued demand sentiment due to poor freight availability,
lower freight rates and general slowdown in economy continued to hamper the commercial vehicle demand. System stock
reduction through retail focus and aligning production will continue to be our approach, while cautiously monitoring the
market, in these challenging times. As a result, retail sales are estimated to be ahead of wholesale by over 25% in August. We
are looking forward to a positive impact of the recently announced stimulus package by the Government."
 Mayank Pareek, President, PV Business Unit, Tata Motors Ltd said, “Under the challenging market situation, we continued to
focus on improving retail sales. Our retail sales were 42% more than offtake and as a result the network stock came down by
over 3000 vehicles. This prepares dealers well for the festival season. Our prime focus remains on the working capital rotation
of the channel. Our aim is to improve the retail capability, till August 2019, 72 new sales outlets were added and 3500+ sales
executives were recruited. Marking the onset of the festive season, we will drive positive sentiments with special offers and
several special editions. We have kick-started this by further increasing the style quotient of the Harrier with the Harrier Dark
Edition. We are hopeful that the recently announced financial package by finance minister will help in improving the liquidity
of market and to reduce the ownership cost. This will certainly help the industry to revive and drive the growth.”

Date – 11 September 2019 5

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

TVS Motors [CMP – INR 403 / MCAP – INR 191 bn]
th
 2W+3W - Sales volume declined 15% yoy at 2,90,455 units. 4 consecutive month of declines in YoY volumes.
 Domestic sales volume de-grew 20% yoy at 2,20,753 units & Exports sales volume grew 6% yoy at 69,702 units.
 2W - Sales volumes dipped 16% yoy at 2,75,851 units.
 Domestic 2W volumes were down 20% yoy at 2,19,528 units and Export 2W volumes were up 4% yoy at 56,323 units.
 Motorcycles and Scooter segment de-grew 17% yoy at 1,09,393 units and 14% yoy at 1,09,272 units respectively.
 3W - Sales volumes were up 11% yoy at 14,604 units.
th
 Domestic 3W volumes dipped 18% yoy at 1,225 units marking 12 consecutive month of decline in YoY volumes. Export 3W
volumes grew 15% yoy at 13,379 units.
YTD Performance –
 2W+3W - Sales volume declined 6% yoy at 14,93,065 units.
 Domestic sales volume de-grew 9% yoy at 11,44,585 units & Exports sales volume grew 6% yoy at 3,48,480 units.
 2W - Sales volumes dipped 7% yoy at 14,25,150 units. Domestic volumes were down 9% yoy at 11,39,559 units and Export
were up 4% yoy at 2,85,591 units.
 3W - Sales volumes were up 10% yoy at 67,915 units. Domestic volumes dipped 31% yoy at 5,026 units and Export volumes
grew 15% yoy at 62,889 units.

VST Tillers Tractors [CMP – INR 1064 / MCAP – INR 9 bn]

 Power Tillers + Tractors - Sales volume were up 4% yoy at 2,250 units. 3rd consecutive month of YoY growth.
 Power Tillers sales volumes de-grew 13% yoy at 1,437 units.
 Tractors sales volumes were up 57% yoy at 813 units.
YTD Performance –
 Power Tillers + Tractors - Sales volume were down 2% yoy at 12,561 units.
 Power Tillers sales volume de-grew 3% yoy at 9,342 units and Tractors sales volume flat yoy at 3,219 units.

Industry News & Voices –

Mr Rajan Wadhera, President, SIAM said, “Sales report has been very dismal with over 30% erosion of sales for Passenger Vehicles.
The Commercial Vehicle and Two wheeler sales are also significantly negative indicating that the market has still not responded to the
various measures initiated by the Hon’ble Finance Minister last month. The series of announcements on credit availability and reducing
the cost of credit that were made do not seem to have percolated down to the NBFCs which support the bulk of finance for the
automotive industry. The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the
dealers. All this while, the Industry has pulled out all stops in offering attractive deals and discounts to the consumers. However, the
ability of the industry to provide large discounts is limited and this only highlights the need for Government to consider reducing the
GST rates from 28% to 18% which would significantly reduce the cost of vehicles and in turn create demand. There is also an urgent
need to come out with an integrated Incentive based Scrappage policy covering all segments of the Auto Industry as promised by the
Hon’ble Finance Minister. As the festival season is around the corner, it is imperative that these decisions are taken quickly and
announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry.”

BS-VI transition will make rest of the year difficult for auto industry: SIAM
Terming it as a "huge challenge", Rajan Wadhera, President, SIAM said on an average, each vehicle manufacturer is spending close to
Rs 1,000 crore to upgrade all of their model line-up to meet the new emission norm within a short span. Industry, which has been
reeling under a prolonged slump, is staring at a difficult road ahead for the rest of the year due to transition to BS-VI emission norm
from BS-VI by April 2020. The auto industry, as we all have seen in the past eight months, has witnessed continuous de-growth and
August being the worst at 30 per cent. Entire value chain of the auto industry - from component suppliers to vehicles manufacturers
and dealers - have been impacted by the slowdown. The road for the rest of the year is also looking difficult because there is a huge
challenge of migration from BS-IV to BS-VI is awaiting us. New technologies coming into vehicle, which has to be done in a span of
three years across all models and have defect free products is a huge challenge. Sales forecasting and operational efficiency has
become important on account of the upcoming BS-IV to BS-VI transition. While the dealers will be managing the front-end, OEMs need
to ensure that there should neither be loss of sales on account of unavailability of products nor allow inventory build-up or write-off
which will create more hardships for the dealers. Auto industry will not only have to deal with slowdown and BS-VI transition, but also
has "actually prepare for the future mobility" - electric, connected and autonomous.

Date – 11 September 2019 6

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

Automakers warn government of millions of job losses
Govt to consider tax cuts on hybrids reiterates no ban on petrol, diesel cars. Two-wheeler sales have been hit particularly hard as a
result of a decline in rural markets and a hike in premiums.Indian automobile companies sought government intervention through a
cut in goods and services tax to stem a deepening slump in vehicle sales, warning that any further delay will put a million jobs at risk.
Rajan Wadhera, President, SIAM said “Till now, 15,000 contractual manufacturing jobs have been lost and another million are at risk if
the slowdown is not reversed. Companies claimed they have already done what they could at their end to deal with the year-long
slowdown and that consumers are holding back purchases because of expectations of a cut in taxes. Passenger vehicle sales have
slumped to their worst in nearly two decades in July, because of higher ownership costs, lack of vehicle financing, farm distress and a
slowing economy.”
Nitin Gadkari, Union minister, Road transport and highways assured automobile executives that the government will consider
reducing taxes on hybrid vehicles to boost sales. He said “India doesn’t plan to ban vehicles that run on either petrol or diesel,
assuaging concerns raised by automakers who have got mixed signals from the government on the road ahead for conventional fossil
fuel vehicles amid a growing focus on cleaner electric mobility. Petrol and diesel vehicles will not be banned and the government also
does not have any intent to ban anyone. These (hybrid) vehicles need to attract less tax now as our intention should be to increase
sales as the sector needs help at the moment. I have also suggested to the finance and commerce ministers if we can provide some
incentives for exports as well."
Pawan Goenka, MD, Mahindra and Mahindra Ltd said “The company has deferred capital expenditure of Rs 800-1,000 crore since
sales volumes have not risen.In 2008 and in 2013, demand went up from the day after excise duty was reduced. This time as well there
will be instant impact on two, three and four-wheeler sales if there is a cut. The slowdown has come at the wrong time since we are
about to shift to the Bharat VI emission norms. If we don’t get out of this slowdown before the transition then we (the industry) will be
in trouble. If the industry does not turn back to positive growth for the remaining part of the months of fiscal year, we may see more
layoffs.”
The slowdown in the automobile industry is a worry for the government since it contributes significantly to generating jobs and
government revenues.
Nirmala Sitharaman, Finance minister said “The government will take a proposal to reduce the goods and services tax rate on
automobiles to the GST Council.”
Automobiles currently attract the highest tax rate of 28 percent, apart from a cess. Gadkari’s announcement to lower GST on hybrid
vehicles will be a boost to Japanese car makers such as Maruti Suzuki India Ltd, Honda Cars India Ltd and Toyota Kirloskar Motor Ltd
who are investing in this technology as an interim solution before moving to electric vehicles. Gadkari had in the 2017 conference of
Siam warned auto firms that they must switch to making vehicles that run on non-polluting alternative fuels such as electricity or
compressed natural gas or risk being overtaken by inevitable policy change. Also, government think tank NITI Aayog on 21 June asked
the auto industry to submit a plan on phasing out internal combustion engine-fitted two-wheelers under 150cc by 2025, and three-
wheelers by 2023, along with shifting to electric mobility. Gadkari has since toned down his approach and recently said the
government won’t set a deadline for companies to shift to EVs but would let market forces decide. As vehicle sales over the last year
nosedived, automobile companies have grown increasingly wary that speculation around a potential cut in indirect taxes has emerged
as one more reason for customers to defer purchases in the festive season.
Guenter Butschek, Chief Executive and MD, Tata Motors Ltd said “Let us know whether GST can be reduced or not as one of the
reasons for the empty showrooms is because people are thinking that things will change in the future. Otherwise we will miss out on
the festive season. The Indian automotive growth story is about to collapse."
Sales of two wheelers have been hit particularly hard as a result of a sharp decline in rural markets and a hike in insurance premiums.
Venu Srinivasan, Chairman, TVS Motor Co., describing the slowdown as the worst in 30 years, warned that the industry will not be
able to absorb the BS-VI switchover disruption if the government fails to cut GST on vehicles. Prices of two-wheelers have increased by
35 percent of the last two years and then the statement of a possibility of being banned has not helped the industry either. BS-VI is a
shock that we have to take and the society and the country will benefit from this. The government should soften the impact for the
automobile industry with a cut in the GST.

Maruti asks auto component industry to produce electronics, key parts in India to cut imports
On government policy, Kenichi Ayukawa, MD and CEO, Maruti Suzuki India said that “if the government sets targets on the end-goals
and allows freedom to the industry players to choose the technology, it would be best suited to achieve the end-goals. Such
technology-agnostic approach will give the freedom of technology-choice, while keeping focus on the target. The local manufacturing
of such parts would not only help Maruti Suzuki India (MSI), but also support the government's Make in India initiative. I have a
challenge and an invitation to offer to you (components industry). The MSI car is over 90 percent local, component-wise. But some key
parts and electronics are areas where we still need to import. But we want to Make-in-India. If anybody can make electronic
components and some key parts in India with quality and reliability, it will not only help MSI, but the entire Indian automobile industry.
The best opportunity to win in the future lies in developing in-house research and development (R&D) capability. If India has to be
competitive in the world of tomorrow, my message is - start developing in-house R&D capability which is a very long drawn process
and the results come slowly. We have to be patient and stay committed.

Date – 11 September 2019 7

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

MG Motor sells 2,018 units of Hector in August vs 1,508 units in July 2019
Gaurav Gupta, Chief Commercial Officer, MG Motor India said "We remain strongly focused on fulfilling the 28,000 bookings, as part
of our commitment to ensure customer satisfaction"
The strong momentum for its SUV Hector has continued with over 11,000 additional customers registered on company's priority
waitlist, after bookings were temporarily halted in July this year because of huge response. The company plans to increase production
of the model to 3,000 units this month from 2,000 per month at present at its Halol manufacturing facility. With increased production,
MG Motor will take a decision on re-opening bookings of the Hector later this year.

Honda Cars India sales dip 51% in August

Honda Cars India Ltd (HCIL) reported 51.28 percent decline in domestic sales at 8,291 units in August as against 17,020 units in the
same month last year. The company also exported 227 units last month.
Rajesh Goel, Senior Vice President and Director, Sales and Marketing, HCIL said "The auto sector continues to witness high de-growth
due to poor consumer sentiment. This is despite the high discounts prevailing in the market which makes it the best time to buy cars.
We hope the recent measures taken by the government will help in improving consumer sentiment and demand creation as we move
forward. With the impending festive season, the sales are likely to pick-up in coming months.”

Toyota Kirloskar Motor reports 21% decline in sales at 11,544 units in August vs 14,581 units in the same month last year
Sales in the domestic market stood at 10,701 units as compared to 14,100 units in August 2018, down 24 percent. However, exports
during the month increased nearly two-fold to 843 units as against 481 in the year-ago month.
N Raja, Deputy Managing Director, TKM said, "The consumer sentiment continues to be muted in the month of August, with
customers deferring their purchase of vehicles. Severe floods across states have also hurt the demand in the industry. Unfavorable
exchange rate is not helping our cost. Recent measures announced by Finance Minister Nirmala Sitharaman to boost the auto sector
with cheaper car loans, improving liquidity through credit expansion to public sector banks, deferring of one-time registration fees,
higher depreciation for all vehicles and lifting ban on purchase of new vehicles in government departments are likely to spur some
demand which is a much needed relief. The latest FDI reforms which will boost local manufacturing, also comes as a positive move to
propel growth in the industry in the long run. We hope that the festive cheer ushers in positive sentiments with better retail sales in
the upcoming months."

Suzuki Motorcycle sales up 2% at 71,631 units in August vs 70,067 units in the corresponding month a year ago
Domestic sales last month grew marginally to 62,752 units as compared with 62,446 units in August 2018.
Devashish Handa, Vice-President, SMIPL said, "Weak consumer sentiments have been one of the key reasons for the downward trend
in the automobile industry. Even under these challenging times, the company has been able to prove its mettle.”

Date – 11 September 2019 8

 AUTO SECTOR UPDATE

MONTHLY SALES VOLUME ANALYSIS

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Date – 11 September 2019 9