Automakers Have Much to Celebrate this Festive Season

Vehicle sales across categories registered a strong uptick last month, reflecting the positive consumer spirit during the ongoing festive period.

The country’s leading car makers clocked double-digit growth in sales despite the recent increase in cess by the government.German carmaker Volkswagen, for instance, reported 17.15% increase in wholesale volumes at 4,603 units in September.

“The advent of the festive season during 2017 saw major changes in the applicable tax structure and discussions on various policies for the industry. In spite of this mixed bag of changing customer sentiments, we have registered a growth of 17.15% in this season over the same period last year,“ said Steffen Knapp, director, Volkswagen Passenger Cars, Volkswagen Group Sales India.

Volkswagen also announced the start of production for its new Passat at its Aurangabad facility in Maharashtra, and the carline is scheduled to be launched in the ongoing quarter.

Maruti Suzuki, the country’s largest carmaker, posted a growth of 10% in September to cross a milestone of 1.5 lakh again. Hyundai Motor India too breached the sales milestone of 50,000 units in September this year with a growth of 17% led by the new-gen Verna.

Tata Motor’s recently launched Nexon helped the company post an 18% rise in sales to 17,286 units, while good offtake of crossover WRV helped Honda Cars India register a strong growth of 22% in September.

However, September’s growth is on expected lines as many of the car makers pushed inventory ahead of Navratri and Diwali celebrations. What’s reassuring though is that the higher cess imposed by the government on bigger cars too has been limited.

While motorcycle sales at Bajaj Auto (BAL) went up by 7% to 2,47,418 units, Suzuki’s two-wheelers volumes grew by 37% to a record 50,785 units during September.

Royal Enfield too sustained its double digit momentum it had been notching up this year with a growth of 22% at 69,393 units in September.

Hero MotoCorp will report its wholesale performance Tuesday, but the company said that it has retailed more than a million units during the festive season so far.

On the commercial vehicle front, VE Commercial Vehicles saw its sales rise by 22.9% to 5,233 units last month.

While sales of Eicher branded trucks and buses went up by 22.6% to 5,084 units, those of Volvo branded products rose to 149 units (against 109 units sold in the year-ago period). Pickup in infrastructure development, strict checks on overloading of commercial vehicles helped Tata Motors grow by 29% to 36,679 units in September.

Ola, Uber see growing demand for auto-rickshaws as cab supply declines

The crippling driver strikes at the beginning of 2017 has provided the boost for the auto-rickshaw category to evolve and become a large part.

Key highlights:

  • Auto-rickshaw category has become now a crucial part of the online commute booking market
  • Total auto-rickshaw rides delivered by online players has increased by a massive 250%
  • It now makes up 10% of the online commute booking market

While driver strikes have crippled online cab aggregators such as Uber and Ola, the players are however seeing a greater demand for auto-rickshaws. The auto-rickshaw category has grown to become now a crucial part of the online commute booking market.

While the online auto-rickshaw market has historically operated in stops and starts, the crippling driver strikes at the beginning of 2017 provided the right tipping point for this nascent category to evolve, according to a RedSeer Consulting report.

The total auto-rickshaw rides delivered by online players has increased by a massive 250% in Q3 2017.

While the total auto-rickshaw rides by online players was 5.5 million in Q3 2016 it has grown significantly to 18.5 million in Q3 2017.

In fact, auto-rickshaw bookings made on online taxi-hailing apps have now amounted to a significant 10% of the total rides, including cabs, car-pooling shuttle buses, etc.

While the auto-rickshaw segment was a mere 3% of the online commute booking market in Q3 2016, it now makes up 10% and the rest 90% is the booking of cabs, car-pooling and others.

Ola Cabs was one of the first to start with the auto-rickshaw booking service on their app and others followed.

One of the main reasons for the growth in auto-rickshaw online booking is due to the lucrative offers.

The report says that lucrative offers such as Rs 29 fare for less than 4 km travel distance for this category has resulted in a growth of 3 times in the last one year.

However, this may be a good option for Ola and Uber especially in the Northern suburbs of Mumbai and in other cities such as Delhi and Bengaluru as cab supply is expected to persist.

The registered cab supply in Q2 2017 has declined to nearly 3 lakh from nearly 5 lakh cabs in Q4 2016, said a recent RedSeer report.

The reason for this was the cutting of incentives, commission rates and higher working hours that were not rolled back even after the cab drivers went on strike several times.

Despite several driver strikes during the year, online cab aggregators seem focused on key profitability by way of reducing driver incentives. Driver incentives of online cab aggregators, such as Uber and Ola, have seen a large decline from Q1 2017 to Q2 2017.

Driver incentives have plummeted from nearly 80% in Q2 2016 to nearly 20% in Q2 2017. This is a drop of nearly 60% in driver incentives in the just a matter of 1 year.

Guangzhou Auto Leaves Stealth Mode, Takes Aim At The U.S. Market

“Keep a cool head and maintain a low profile. Never take the lead but aim to do something big.”

– Chinese leader Deng Xiaoping, circa 1985

Guangzhou Auto is done with keeping a low profile. It now hungers for center stage, spotlights on full beam.

That’s a big change. For the past 25 years, the City of Guangzhou took Deng’s advice about humility to heart. People in the metropolis of 14 million just north of Hong Kong went about their business with their shoulders to the grindstone, accumulating significant wealth. Guangzhou became the workaday commercial hub of Guangdong, China’s richest province.

Respect and recognition were bound to follow Guangzhou’s wealth, right?

Wrong. Rival cities Beijing and Shanghai stole the attention. Foreign companies flocked there. And when attention did  turn to the south of China, eyes were fixated on mighty Hong Kong. Or on Shenzhen, that bubbling fount of entrepreneurship.

Guangzhou’s status gradually slid toward that of a New Jersey to a New York. Capable and productive – yes. But too often overlooked

That era is officially over. Today Guangzhou’s leaders have big plans for the future. And they want the world to know all about them.

Two key priorities:

  • Develop the Greater Guangzhou Bay Area  (Guangzhou, Shenzhen, Hong Kong, Macao) into the Silicon Valley of China.
  • Be the first Chinese carmaker to land on American shores.

Last week I met with Mr. Cai Chaolin Standing Member of the Chinese Communist Party Guangzhou Committee and Mr. Feng Xingya President of Guangzhou Automotive Group at the Four Seasons Hotel in Palo Alto. They were hosting a private gathering. Guests included several dozen Silicon Valley business and political leaders.

According to Mr. Cai, Guangzhou “stands at the forefront of China’s opening up and will play the leading force to build a world class urban agglomeration after New York, San Francisco and the Tokyo Bay areas.” The event in Palo Alto was designed to “bring together the champions of Guangzhou and the [San Francisco] Bay area.”

As part of that drive, the City of Guangzhou is giving its full support to Guangzhou Automotive’s plans to crack the U.S. market.

Here’s a look at Guangzhou Auto’s plans and arsenal, distilled into a Q&A format:

Q: Is Guangzhou Automotive a major player?

A: Guangzhou Automotive runs thriving joint ventures with Toyota, Honda, FCA and Mitsubishi.   Group sales topped 900,000 in the first half of 2017, up 32% year-on-year. Jeep Cherokee, Renegade and Compass sales alone jumped to over 100,000 in the first six months, up 77 percent. The state enterprise also builds its own vehicles under the Trumpchi brand.

Q: Are they making any money?

Michael J. Dunne is an entrepreneur & author of American Wheels, Chinese Roads. New book about Chinese cars coming to America soon. Get in touch: michael.dunne@dunneautomotive.com

September auto sales could reverse a negative trend troubling the industry

Major automakers will report September US sales on Tuesday, and analysts expect the numbers to reverse a months-long trend.

The September yearly sales pace could come in closer to the record years of 2015 and 2016 – 17.5 million and 17.55 million respectively – for the first time since April.

Predictions range from a low of 17.2 million to a high of 17.6 million, according to analysts surveyed by Bloomberg.
The consensus is for 17.4 million, a dip from last September, but the US sales market during the second half of 2016 was running very hot, surging toward an all-time record.

Very few market observers expected that torrid pace to hold up.

In the aftermath of Hurricane Harvey, the auto industry is expecting a boost in new car sales during the fourth quarter to replace damaged or destroyed vehicles in the Southeast. So 2017 could end slightly below 2016 in terms of sales, but with the healthy pace by historical standards.

Regardless of how the numbers shake down, one thing is certain: September US auto sales will continue to be all about crossover SUVs and pickup trucks, the highly profitable vehicles that have defined the boom times of the past two years.

The money made from these vehicles has enabled automakers to build up their balance sheets and sock away cash for a sales downturn.

That downturn, however, looks as though it won’t arrive until sometime in late 2018 or early 2019.