June 2019

India Light Vehicle Sales Update

Sales Set to End 2019 in Negative Growth Territory

The sustained weakness in the Indian market persisted into May, as total Light Vehicle (LV) demand contracted by 19% year-on-year (YoY) to 280k units.

Passenger Vehicle (PV) sales slumped by 20% YoY to 228k units, while demand for Light Commercial Vehicles (LCVs), with GVW of up to 6T, fell by 14% YoY to 52k units.

The negative growth, however, comes over a high base last year as strong retail sales in Q1 2018 depleted dealer inventory. This, in turn, meant that automakers hiked wholesales during April and May of last year.

This year, however, the situation is reversed as weak retail sales have forced OEMs to reduce wholesales and cut production for the past few months.

In May, PV retail sales dipped by about 1.5% YoY.

Average PV stocks improved marginally in May, to 35-40 days, down from 40-45 days in the preceding month, according to the Federation of Automobile Dealers Associations (FADA).

“The current situation continues to be worrisome and consumer sentiment continues to be negative. With liquidity still an issue and the new government getting settled and in the process of planning and rolling out new initiatives coupled with delay in monsoon by 10-12 days, we expect the near term outlook of the next 4- 6 weeks to be similar to last month with overall auto retails continuing to be under strain across all verticals,” FADA noted.

On a seasonally adjusted annualized rate (SAAR) basis, LV sales slowed to 3.45 mn units in May, compared to 3.59 mn units in April and 3.67 mn in March, marking the fifth consecutive month of month-on-month (MoM) decline.

Total LV sales in the five months to May fell by 7% YoY to 1.58 mn units, consisting of 1.26k PVs (-9% YoY) and 320k LCVs (+3% YoY).

Political uncertainty ahead of the April/May election, credit squeeze and high inventory levels have all served to dampen the market so far this year.

After a decisive victory, Prime Minister Narendra Modi is now into his second term, pledging to create more jobs and address the issue of widespread rural distress.

GDP growth slowed sharply in the first quarter, to a five-year low of 5.8% YoY, dragged by sluggish investment and negative net exports. Private consumption slowed, too, due to the ongoing liquidity squeeze in non-banking financial companies.

The central bank has cut the benchmark interest rate for the third time this year, to a nine-year low of 5.75%, which should help to support consumption in the coming months.

LV sales are also expected to pick up in Q4 2019, as automakers are likely to launch massive sales campaigns to wind down inventory, ahead of the nationwide implementation of the BS VI emissions standards in April 2020.

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India Light Vehicle Sales Update

Nevertheless, we decided to cut India’s projections further. We lowered our PV outlook by 1-3% through to 2026. The LCV forecast, meanwhile, was slashed by 6-9% because of the phasing out of the Mahindra Jeeto Mini , Mahindra Supro and Tata Magic. The loss of these models took around 40-100k units out of the market.

Our overall LV sales predictions were trimmed by 2-4% compared to our assumptions in the previous report.

The downgraded 2019 forecast now stands at 3.87 mn LVs, representing a drop of 3% YoY. This would mark the first YoY decline in the Indian market since 2014.

Long-term sales, on the other hand, are estimated to expand at a 7-year CAGR of 6%, to reach 5.64 mn units by 2026.

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India Light Vehicle Sales Update

Market Top Lines Best Selling Models

May Growth YTD Growth 2019 Growth May Growth Share YTD Growth Share Sales 309,238 -19% 1,762,021 -7% PV PV 228,031 -20% 1,258,762 -9% 3,143,721 -2% Maruti-Suzuki Alto 16,394 -25% 7.2% 104,097 -1% 8.3% LCV 52,380 -14% 319,507 3% 729,395 -4% Maruti-Suzuki Dzire 16,196 -34% 7.1% 89,663 -23% 7.1% M&H CV 28,827 -18% 183,752 -7% Suzuki Baleno 15,176 -22% 6.7% 84,456 -6% 6.7%

Production 397,122 0% 2,131,732 -6% LCV PV 302,470 -12% 1,589,600 -7% 3,788,903 -3% 9,213 -25% 4.0% 66,361 1% 5.3% LCV 57,893 -11% 336,595 1% 757,399 -6% Maruti-Suzuki Eeco 11,739 49% 5.1% 48,612 40% 3.9% M&H CV 36,759 -16% 205,537 -6% Mahindra Bolero Pickups 4,625 -31% 2.0% 37,162 22% 3.0%

Top Brands (Sales) Top Manufacturers (Production) # Brand May Growth YTD Growth # Manufacturer May Growth YTD Growth

1 Maruti-Suzuki 87,112 -23% 482,468 -8% 1 Maruti Suzuki India 112,562 -19% 569,676 -14% 2 Hyundai 42,502 -6% 217,770 -5% 2 Hyundai Group 55,438 14% 293,493 2% 3 Suzuki 22,161 -31% 121,776 -22% 3 Mahindra 21,079 -4% 118,506 4% 4 Mahindra 19,391 5% 106,801 4% 4 Suzuki Group 24,592 -10% 113,845 13% 5 Tata 10,900 -38% 77,340 -17% 5 Cord Group 15,577 -29% 99,092 -16% 6 Honda 11,442 -28% 71,704 10% 6 Honda Cars India 13,473 -5% 76,167 30% 7 Toyota 12,138 -7% 58,049 -8% 7 Mitsubishi 10,893 -25% 70,794 -22% 8 Cord 6,361 -30% 35,516 -19% 8 8,767 -38% 59,721 -18% 9 Renault 5,949 -12% 31,398 -13% 9 Toyota Kirloskar India 13,903 -4% 59,705 -8% 10 Volkswagen 2,685 -14% 12,851 -22% 10 Volkswagen Group 10,375 14% 43,940 -2% 11 Datsun 1,382 -52% 8,416 -49% 11 Tata-Ciat 6,090 -13% 33,805 -17% 12 Mercedes-Benz 1,199 1% 6,353 -8% 12 General Motors Group 6,517 0% 33,574 -4%

PMssenger Vehicle PMssenger 13 Škoda 1,148 -19% 6,174 -9% Vehicle PMssenger 13 Škoda Auto 1,003 -45% 5,457 -29% 14 Jeep 1,090 -32% 5,983 -41% 14 Daimler Group 1,025 -1% 5,401 -10% 15 BMW 834 -7% 4,492 12% 15 BMW Group 775 -3% 4,149 18% 16 Nissan 411 -40% 4,180 -4% 16 Volvo Group India 160 32% 759 42% 17 Audi 437 -24% 2,291 -20% 17 Corce Motors 109 -45% 709 -43% 18 Volvo 231 9% 1,154 11% 18 Premier Auto 132 -12% 701 -17% 19 168 -27% 944 -22% 19 Isuzu Motors Limited 0 -100% 106 -78% 20 Corce 114 -40% 924 -41% 20 Hindustan Motors 0 -100% 0 -100% 1 Mahindra 16,019 -13% 103,576 9% 1 Mahindra 16,988 -26% 116,942 0% 2 Tata 16,553 -14% 101,742 -4% 2 Tata Motors 21,125 17% 103,844 3% 3 Maruti-Suzuki 13,977 -24% 81,573 4% 3 Maruti Suzuki India 14,027 -26% 83,495 2% 4 Ashok Leyland 3,713 34% 21,123 11% 4 Ashok Leyland 3,619 51% 21,388 20% 5 Corce 1,546 4% 7,998 -13% 5 Corce Motors 1,312 -16% 6,039 -31% 6 Isuzu 235 -1% 1,644 -14% 6 Isuzu Motors Limited 450 16% 3,026 46% 7 Eicher 283 -1% 1,460 -1% 7 Eicher Motors 235 -22% 1,365 -13% 8 Piaggio 137 -11% 496 -27% CommerciMl Vehicle CommerciMl 8 Piaggio 54 -68% 391 -50% Vehicle CommerciMl 9 10

8th July 2019

For further information contact Ms. Sukanya Tunhau, Phone +662 264 2050, [email protected]

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