Auto sales in May 2022: All segments move up from the pandemic-marred low base of May 2021

New Delhi: The good news is that all segments of the automobile industry were in the green in May 2022. This comes after a long time and looks like a real relief. But the not-so-good news is that the manifold sales growth for the OEMs comes from the low base of May 2021, when the country was under the impact of the second wave of Covid-19 pandemic and states were under lockdown.

The following is a segment-wise report of vehicle despatches to dealers during May 2022.

Passenger vehicles

For the passenger vehicle segment in May 2022, there were production constraints owing to the semiconductor shortage. An average vehicle had a waiting period of 6-8 months, for specific variants even of a year.

The country’s largest carmaker Maruti Suzuki reported a growth of 278% in its domestic sales to 124,474 units in May 2022. The company had recorded sales of only 32,903 units in May 2021.

In the mini cars segment (Alto, S-Presso), the company clocked sales of 17,408 units, followed by compact cars (Baleno, Celerio, Dzire, Ignis, Swift, Tour S, WagonR) to 67,947 units and of 586 units of the mid-size Ciaz.

Sales of utility vehicles namely Ertiga, S-Cross, Vitara Brezza and XL6 clocked 28,051 units while the Eeco van reported sales of 10,482 units in May 2022.

“The sales figures of May 2022 are not comparable with that of May 2021 as the operations of the company then were badly affected by Covid-related disruptions,” the carmaker said in a statement.

Interestingly, auto major Tata Motors moved up to the second spot during the month. Hyundai India was on the third spot.

Hyundai informed that the company’s plants in Chennai were shut down for the scheduled biannual maintenance, leading to 6 no-production days from May 16 to 21. This reduced the vehicle availability in the month, thus affecting May 2022 sales numbers (both domestic and exports).

However, this was the second time in six months that the maker of Nexon beat Hyundai India by jumping up one step. Tata’s ICE vehicle sales stood at 39,887 units and EV sales crossed the 3,000-unit mark to clock 3,454 units. In December 2021, Tata Motors sold 3,000 units more than Hyundai India. In May this year the difference was only 1,000 units.

Meanwhile, the volume gap between the third and the fourth carmaker has been widening over time. For May, Mahindra’s wholesales were around 20,000 units behind.

Veejay Nakra, President, Automotive Division, M&M Ltd, said, “With sales of 26,632 SUVs in May, we continued the growth momentum with all our brands performing well including XUV700 and Thar.”

Kia India continued to maintain its position as the top 5 carmaker for May by selling 7,899 units of Sonet, followed by 5,953 units of Seltos, 4,612 units of Carens and 239 units of the Carnival. The company also dispatched 15 EV6 units last month to dealerships as display cars.

Skoda said Slavia and Kushaq models contributed the most to its sales growth.

Two-wheelers

The two-wheeler segment, which has been growing sequentially each month, has shown robust year-on-year growth in wholesales during May 2022. However, it may be noted that during the second wave of COVID-19 in India last year, the rural income was the worst hit which adversely impacted the consumer demand and sentiments for these vehicles in May 2021.

Going forward, the motorcycles and scooters segment is expected to see a positive trend in the upcoming months due to the opening up of educational institutions and offices, excise duty reduction on fuel and the prediction of a normal monsoon. However, the sales volumes for two wheelers are far from normal and the recent hike in third-party insurance rates may add to this.

Rohan Kanwar Gupta, Vice President, Corporate Ratings, ICRA, says, “Domestic 2W industry volumes contracted for a third consecutive year in FY2022, with the consumer sentiments remaining muted. The cost of ownership of a two-wheeler has been steadily increasing over the years, thereby impacting affordability. OEMs have been forced to hike prices on account of multiple factors – raw material hardening, transition to stringent emission norms and changes mandated by regulations, especially with regards to safety standards.”

“In FY2022, even as there was no impact of regulatory notifications on prices, the OEMs had to pass on raw material hardening impact through multiple price hikes. As a result, enhanced cost of acquisition coupled with heightened crude prices have led to a significant increase in the cost of the ownership,” he said.

The country’s largest two-wheeler maker Hero MotoCorp clocked 4,52,246 unit motorcycle sales and 34,458 unit scooter sales in the domestic market during May 2022.

Hero said it expects to see a positive trend in the coming months, on the back of normal monsoon, decent Rabi harvest and continued government policy support.

Vikram Kasbekar, Executive Director, Hero MotoCorp, said, “We welcome the recent decision of the government to reduce the central excise duty on petrol and diesel, which has substantially brought down the fuel costs, thereby providing a much-needed relief to motorcycle and scooter users in the country. We also welcome the steps taken to cut duties on iron and steel inputs, which should help in softening steel prices in the domestic market.”

“The increase in the third-party insurance rates would, however, adversely impact customer sentiments as this will further increase the upfront costs of two-wheelers in India. It is not usual to have insurance paid for 3-5 years instead of annual renewals, as is generally the case in many countries. The industry seeks government intervention and support in this regard,” he added.

Honda Motorcycle & Scooter India (HMSI) also said, the sales figures this month remain incomparable with May 2021 as frequent lockdowns in the wake of the second wave of Covid-19 marred the performance during this period last year. “Growth in domestic as well as international trade continues to complement each other as we approach an early monsoon.”

Atsushi Ogata, Managing Director, President & CEO, HMSI, said, “The market is regaining strength as disturbances in terms of supply side are subsiding coupled with rise in physical presence at office and educational institutions.”

TVS said its domestic two-wheeler sales included TVS iQube Electric sales of 2,637 units in May 2022. Its motorcycle sales grew from 125,188 units in May 2021 to 148,560 units in May 2022. Scooter sales of the company grew from 19,627 units in May 2021 to 100,665 units in May 2022.

“The shortage in the supply of semiconductors has impacted production and sales of premium two-wheelers,” the company said.

According to ICRA, the increase in third party insurance premiums is unlikely to materially impact 2W demand as the rates have been hiked for the premium category (15%-21% increase for >150 cc category), while there has been no increase for the entry-level motorcycles and scooters (75 cc-150 cc), the largest segment by volumes in the domestic market (~89%).

“Given the fact that the increase in road price for the premium segment on account of the rate hike is also not significant (<1%); the rate hike is unlikely to have a major impact on consumer sentiments and comes as a relief for the industry, which has been grappling with muted demand,” it said.

Commercial vehicles and three-wheelers

The country’s largest commercial vehicle maker Tata Motors reported highest sales for the SCV cargo and pickup segment at 14,899 units in May 2022. The auto major’s M&HCV category clocked sales of 8,409 units, I&LCV category of 4,474 units and passenger carriers of 3,632 units.

For Mahindra, LCVs of 2T-3.5T clocked the majority sales of 17289 units in May 2022. This was followed by three-wheeler sales at 3645 units, LCVs less than 2T at 3228 units and LCVs over 3.5T and MHCVs at 632 units.

Veejay Nakra, President, Automotive Division, M&M Ltd, said, “Our Commercial Vehicles have also registered strong growth across segments. We are closely monitoring the supply chain related issues, which continue to constraint volumes and are taking appropriate actions to mitigate the impact.”

Tractors

Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra Ltd,. said, “With the timely arrival of the south-west monsoon and forecast of a normal monsoon, kharif crop is expected to deliver record production. Food prices continue to be high, ensuring better remuneration for farmers for their produce, creating a positive sentiment and higher demand for tractors and agri implements. In the exports market, we have sold 1569 tractors, a growth of 17% over last year.

“We see rural sentiment gradually improving in spite of low crop yields due to extreme heat conditions this harvest season, on account of better crop price realization and forecast of normal rainfall and possible timely sowing this year. With the recent Government actions, inflation may stabilise in the near-term and operating leverage may further possibly help in partially diluting the impact on margins in the coming quarters,” he said.

(This is a developing story. We will keep updating the numbers as the OEMs release their sales data.)

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