Car sales inch forward, unlikely to rev up soon

Tags: News
After four months of continuous fall, car sales finally climbed 1.39 per cent in February, riding the excise duty cut on vehicles in the interim budget and the positive sentiment created by the auto expo earlier that month.

Industry analysts, however, suggest that this marginal rise may not make a huge difference to the plunging bottomlines of carmakers. Even higher sales of SUVs in the runup to the general elections in April and May may not spur demand significantly.

In all 160,718 cars were sold in February up from 158,512 a year earlier, registering a growth of 1.39 per cent, according to sales numbers released by the industry lobby, Society of Indian Automobile Manufacturers (Siam), on Monday. However, sales dropped 4.6 per cent to about 1.61 million cars in the first 11 months of this financial year.

“We don’t know if this marginal increase will sustain over the next three-four months. However, we will end this financial year with negative growth for passenger cars and commercial vehicles,” Vishnu Mathur, director general, Siam, told Financial Chronicle.

December usually ends in good sales growth when people and companies rush to buy vehicles to take advantage of the depreciation benefit, but that may not be the case this time around, said Mathur.

He said only April-May sales data would give some indication if the negative trend had reversed. “Companies have reported that footfalls have risen after the auto expo and excise duty cut on cars,” Mathur said. But sales of utility vehicles fell by 9 per cent at 43,507 units in February, down from 47,859 units sold in the same month last year, he said.

“General election campaigns do not spur so much demand for utility vehicles to make any impact on slowing demand. On an average, 45,000 SUVs are sold across the industry and even if 1,000 to 2,000 units are sold during the election campaign, it does not help to bring the slowing industry back on track,” Mathur said.

Pravin Shah, CEO automotive division at Mahindra & Mahindra, India’s largest manufacturer of SUVs, agreed. “The general elections do not trigger sales growth of SUVs. Even if they do, they are few and far between due to the election code of conduct,” he said. On an average, Mahindra sells 19,000 SUVs monthly, he said. In the interim budget on February 17, finance minister P Chidambaram cut excise duty to 8 per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles, 24 per cent from 30 per cent for SUVs, 20 per cent for mid-sized cars from 24 per cent and 24 per cent for large cars from 27 per cent.

Maruti Suzuki, posted a very marginal rise last month, whereas others such as South Korean giant Hyundai reported flat growth and Mahindra and Mahindra and Toyota Kirloskar Motors posted negative sales. Maruti Suzuki , posted a marginal increase of 1.80 per cent in domestic sales at 99,758 units last month from 97,955 units in the same month last year. Sales at Hyundai Motor were flat at 34,005 units compared with 34,002 units in February 2013. “Post the reduction in excise duty, enquiry inflow has increased with February sales showing a growth of two per cent over the earlier month,” Rakesh Srivastava, senior VP, sales and marketing at Hyundai Motor India, said.

Sales of commercial vehicles fell 29.84 per cent to 47,982 units in February against 68,388 units last year, the 10th straight monthly decline. But motorcycle sales climbed 5.39 per cent last month to 843,307 units from 800,165 units a year earlier. Total two-wheeler sales in February also rose 9.69 per cent to 1,220,012 units, up from 1,112,269 units.

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