Volumes across most UV brands fell in December as a sharp sales drop was seen for urban SUVs – Ertiga, Duster, Ecosport, Terrano, while sales held up for XUV500. In power bikes, Yamaha’s FZ gained share smartly while Bajaj Pulsar witnessed the sharpest decline in volumes
Auto sales in December are typically low as this is a lean month and most companies go for inventory adjustments during this period. Even then, in December new launches in utility vehicle (UV) segment failed to maintain their average monthly sales.
"In passenger cars, most of Hyundai brands reported sales declines (unlike Maruti Suzuki India Ltd-MSIL), while in UVs, new launches clocked lower volumes. In bikes, (Honda) Dream lost share in the executive segment as (Hero) Passion gained, while (Bajaj) Pulsar lost share in the premium segment to Yamaha’s FZ and TVS’s Apache," said Religare Capital Markets in a research note.
Volumes for Hyundai brands fall in December
Overall, car volumes declined 4.5% in December, partly affected by the inventory adjustment in a seasonally lean month. Most Hyundai brands saw lower volumes, Grand i10 at 9,100 units against an average of about 10,300 for the past three months, i20 at 3,500 units vs. 5,600 in April-November, (Honda) Eon 5,400 units vs 7,400 units, and (Honda) Amaze 4,500 units vs 6,600 units. MSIL’s volumes however remained in line with the monthly sales trend (Swift, Dzire, Alto and WagonR at 16,800, 15,400, 23,800 and 12,100 units, respectively) as the company gained market share.
According to the report, (Maruti) Alto gained share in the ‘mini’ segment by 250 basis points (bps) on month-on-month (MoM) (still down 240bps year-to-date (YTD)) as its share inched up to 50%; Honda’s Eon is consistently losing share in the past four months—now at 11.4% vs an average of 16% during April to November.
"Hyundai’s Grand i10 and i20 lost share MoM in their respective segments as MSIL’s Swift and Dzire gained. Ford’s Figo is consistently losing share in segment. Amaze’s volumes have also dropped in the past two months to 4,500 against a run-rate of 6000 to 7000 units per month," Religare Capital said.
New launch sales in UVs moderate
During December, net UV segment volumes declined by a sharp 10% with the MoM drop more reflective of the newer launches that lost market share during the month. (Renault) Duster at 2,600 units versus an average of 4,200 units during April to November, (Ford) Ecosport at 3,900 units versus an average of 5,000 units since launch, and (Nissan) Terrano at 1,400 units versus 3,000 units in October and November 2013.
"Ecosport seems to be losing sheen with volumes plunging from 6,200 units in September to 3,900 units in December, thus leading to market share gains for other incumbent brands like Mahindra & Mahindra (M&M) Bolero and Scorpio and (Toyota) Innova, which gained by 180bps, 35bps and 222bps MoM, respectively," the research note said.
A sharp sales drop was seen for urban SUVs—(Maruti) Ertiga, Duster, Ecosport, Terrano, while sales held up for (M&M) XUV500. Among other rural and semi-urban brands, Innova volumes improved MoM, while the drop for other incumbents like Bolero and Scorpio was also milder.
Passion, FZ, Apache gain share in bikes
Volumes for Honda’s Dream spiralled down in December to about 45,000 units as its share in the 75-110cc segment dropped to 8.3% (versus the August 2013 peak of 12%) as Passion gained while (Bajaj) Discover maintained its share MoM. In 110-125cc segment, (Hero) Glamour gained by 270bps at the expense of (Honda) CB Shine, while Discover remained steady. In the premium segment, volumes for Pulsar products fell sharply MoM as Bajaj lost share to Yamaha’s FZ and TVS’s Apache.
Activa gains further share in scooters
Honda Activa’s share in scooters continued to grow– to over 50% in December compared with 48% in November 2013 and 38% in December 2012. The share of Hero brands—Maestro and Pleasure—also improved MoM by 170bps/70bps. (TVS) Jupiter volumes continued to inch up since launch, now at 13,400 units with a 4.4% share – the fifth highest in the segment.
The launch of the Jupiter by TVS has resulted in cannibalization of the other products like Streak, Pep+ and Wego, Religare Capital said in the report.
During the December quarter, TTK Prestige’s net profit falls to Rs29.49 crore on lower sales demand during festival season
Kitchen appliance maker TTK Prestige reported a sharp fall of 33% in its third quarter net profit at Rs29.49 crore compared with Rs44.10 crore a year ago period. Its December quarter, its net sales also fell 15% to Rs369.44crore from Rs437.13 crore from same period last year.
In a release, TTK Prestige said, “It has seen low consumer demand during festival season through out the country including rural markets. Sharp inflation in articles of daily consumptions affected disposable income of consumers.”
TTK Prestige claims that, in December 2012 quarter, due to government’s announcement of subsidised gas cylinder cap of six, it has seen huge demand of induction cook-tops and bundled products. However, the policy switch from six to nine gas cylinders affected the demand of its cookware appliances.
Earlier, during the September 2013 quarter, TTK Prestige signed Bollywood star couple Aishwarya Rai Bachchan and Abhishek Bachchan as their brand ambassadors and had their mega advertising campaign during festival season to market their products.
TTK Prestige closed Friday 1.64% higher at Rs3,481 on the BSE, while the benchmark Sensex ended 201 points down at 21,063.
While commodity bourses will not apply initial, additional and special margins on hedgers or sellers who give delivery, the Exchanges would continue to collect MTM margins
Commodities market regulator Forwards Markets Commission (FMC) has exempted hedgers from paying risk margin in agricultural commodities from 1st February in order to help boost participation in the commodity futures market.
In a directive, FMC has asked MCX, NCDEX, NMCE, ICEX, UCX and ACE not to apply initial, additional and special margins on hedgers or sellers who give delivery on bourses.
Market participants, including hedgers, are required to deposit margin, a type of collateral, with the exchanges to lower the risk exposure. It is collected in the form of initial, additional and special margins depending on the risk.
Hedgers are generally commercial producers and consumers of the traded commodities. They participate in the futures market to manage their spot market price risk.
However, the exchanges have been asked to continue with the collection of mark-to-market margins from such market participants. MTM margin is collected to offset losses (if any) that have already been incurred on the positions held by a trader.
This decision has been taken following a recommendation by the FMC’s newly constituted Risk Management Group (RMG).
The regulator said RMG has recommended that if a hedger has made early payment of commodity, then he may be exempted from paying the risk margins.