March auto sales pose a mixed bag for the industry

March proved a mixed bag for the auto industry in India as shortages of electronic components continued to affect auto production in the country. While manufacturers like Maruti Suzuki and Hyundai Motors saw wholesale declines, others like Tata Motors, Skoda and Kia posted their highest-ever monthly wholesale prices.

Market leader Maruti Suzuki said it sold 8% fewer units in the domestic market last month, at 1,37,658, compared to a year earlier. Local sales for the full year increased 3% to 13,65,370 units. “The shortage of electronic components had some impact on the production of vehicles in fiscal year 2021-22. The company said in a statement. “The company has taken all possible measures to minimize the impact. As the supply situation of electronic components remains unpredictable, it could also have some impact on the production volume in fiscal year 2022-23,” she added.

However, the company exported 2,38,376 units in FY22 – the highest figure in a fiscal year. Hisashi Takeuchi, who took over as MD and CEO on Friday, said, “These export figures reflect India’s manufacturing potential and acceptance of Indian-made vehicles around the world.”

Rohan Kanwar Gupta, VP and Sector Head – Corporate Ratings, ICRA, said wholesale shipments of passenger cars have increased in recent months, helped by an improvement in semiconductor supplies. “In March 2022, the domestic wholesale volume was at [about] 3.2 lakh units represented [about] 6% growth on a sequential basis and only a marginal 0.4% year-on-year decline,” said Mr. Gupta, adding that retail sales have also improved in the recent past thanks to improved production; In March 2022, retail sales at 3.2 lakh units represented a year-on-year decline of only about 6%.

“However, the ongoing crisis related to Russia and Ukraine could impact semiconductor chip production as Russia and Ukraine are both raw material suppliers for semiconductor manufacturing and can still be monitored. The impact of the crisis in the form of higher fuel and commodity prices also pose a risk to the demand outlook should it escalate into a protracted war,” he added.

Hyundai Motor India sold 44,600 units in the domestic market and exported 10,687 units in March 2022. For the full fiscal year, the company saw domestic sales grow 2% to 4,71,535 units.

Mahindra & Mahindra homegrown passenger car sales grew 65% to 27,603 units in March and 44% to 2,25,895 for the full fiscal year. Automotive Division CEO Veejay Nakra said demand remains strong even as the company “keeps an eye on the global supply chain.”

Tata Motors sold a total of 6,92,554 units in the domestic market for the full fiscal year, up 49% year-on-year, while it posted 30% growth to 86,718 units in March. Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd. and Tata Passenger Electric Mobility Ltd., said: “Tata Motors set several new records in a challenging year disrupted by two COVID waves, a semiconductor crisis and a sharp rise in commodity prices. We posted our highest annual, quarterly and monthly sales ever, supported by strong demand for our New Forever range and agile supply-side measures.” He said the company had its highest annual passenger car sales of 3,70,372 units ( PV) recorded a 67% growth over the previous fiscal year.

“Tata Motors’ domestic sales of commercial vehicles in Q4 were 1,10,027 units [about] 21% higher sequentially and 12% higher than same quarter last year (Q4 FY21)… Early signs of recovery have been seen in the otherwise hardest hit commercial vehicle passenger segment… We are cautiously optimistic on domestic demand for MHCV and ILCV as we closely monitor geopolitical developments, fuel inflation and semiconductor shortages.”

Meanwhile, Honda Cars India announced that it posted 4.3% annualized sales growth in FY22 to 85,609 units. Domestic sales for March were lower at 6,589 units compared to 7,103 units a year earlier. Yuichi Murata, Director, Marketing and Sales said, “The past fiscal year has been mixed for the industry. Each quarter has been riddled with multiple challenges – from the pandemic to shortages, commodity price increases and chip shortages. However, the industry has shown resilience and managed to restore positive sentiment in the market.”

He added, “We have not been isolated from these challenges and have felt the impact of the chip shortage. With the market situation returning to normal after a long difficult period, the current situation looks stable and paves the way for future growth. We are entering this financial year with renewed energy and enthusiasm.”

Toyota Kirloskar Motor said it delivered 17,131 units in March, the highest domestic sales in a single month in the past five years. For the full year, the company posted 58% growth and sold 1,23,770 units wholesale

Nissan Motor India also posted 100% year-on-year growth with wholesale sales of 37,678 units in FY21 and 3,007 units in March 2022. Managing Director Rakesh Srivastava said: “FY21 for Nissan India was a turnaround year with volume growth of 100 % domestic industry growth of 13%, despite headwind challenges from COVID-19 and semiconductor-related supply shortages.

In March, Skoda Auto India achieved its highest sales volume to date with 5,608 units. The company’s previous peak was 4,923 cars sold in June 2012. Zac Hollis, Brand Director, said: “The concerted efforts of the entire team to ensure that the India 2.0 project is successfully launched is bearing fruit… Despite the challenges ahead impacting market sentiment near-term, we are confident that 2022 will be our best year yet in India.”

Kia India also posted its highest ever domestic sales in March with 22,622 units sold. For the full year, the company sold 1,86,787 units.

MG Motors said it sold 4,721 units at retail in March, down 14.5%.