Auto firms put up a brave face despite falling sales news
12 August 2008

Mumbai: The auto sector has braved the slowdown and weathered the fuel storm despite sales hitting the brakes in July, says the Society of Indian Automobile Manufacturers (SIAM).

Sales of passenger cars declined by around 1.7 per cent in July over the same period last year, but the production in on track, says SIAM.

As many as seven of the 13 major carmakers reported negative growth in sales in July. The big losers were Tata Motors, India's third-largest carmaker, whose sales dropped 8.9 per cent to 12,012 and Honda Siel Cars India, the fourth-largest carmaker, whose tally fell 7 per cent to 4,006 units in July.

Car market leader Maruti Suzuki India posted a minuscule 0.1 per cent increase in sales at 52,911 in July. Arch rival South Korean major Hyundai grew 0.5 per cent to 15,066 in July over last year.

Passenger vehicles sales growth dipped to 10.97 per cent for the first four months from 15 per cent growth in the first three.

The passenger car market in India, which witnessed an average double-digit growth in the last two and a half years, saw sales dip 1.71 per cent to 87,724 units in July this year against 89,250 units in the same month last year.

Passenger vehicles sales grew 10.97 per cent during April-July 2008,  lower than the January-March growth of 15.08 per cent. Passenger car sales grew 8.91 per cent, utility vehicles by 16.03 per cent and multipurpose vehicles by 24.62 per cent in this period.

Overall commercial vehicles sales grew by 8.00 per cent, which is lower than the January-March growth of 9.59 per cent. Medium and heavy commercial vehicles grew at 5.45 per cent and light commercial vehicles recorded a growth of 11.13 per cent.

Three-wheeler sales grew 3.28 per cent in April-July 2008 over the first quarter growth while passenger carriers grew by 18.62 per cent  and goods carriers declined by 21.71 per cent.

Two-wheeler sales also registered higher growth of 9.91 per cent during this period against the first quarter growth of 7.15 per cent. Sales of motorcycles and scooters grew by 10.95 per cent and 7.03 per cent respectively. Moped sales grew by 3.38 per cent. Electric two-wheeler segment also grew by 20.50 per cent.

Exports during April-July 2008 recorded a growth of 23.92 per cent, although not all segments posted growth.

Passenger vehicle and two-wheelers segment grew by 42.66 per cent and 27.04 per cent respectively. Exports of commercial vehicles segment declined by 4.12 per cent. Three-wheeler exports also declined by 10.22 per cent in this period.

Bajaj Auto saw sales fall 4.03 per cent at 1.14 lakh compared to 1.19 lakh last year, TVS Motor's sales jumped 9.11 per cent to 1.02 lakh against 93,971 in the same month last year.

The scooter segment grew 6.36 per cent to 97,905 in July from 92,048 in the same period last year. Hero Honda also led the market posting nearly 11 per cent increase in sales at 56,584 in July against 51,062 in the same month last year. 

Input prices have gone up and the impact of higher interest rates in July will be felt in the coming months, said SIAM.

Two wheeler sales are expected to take a further knock as most banks are trying to cut down the component of two wheeler loans in their portfolio.

Analysts expect auto sales to be low till the festive season in September-October or until manufacturers start offering some incentives to new buyers.

But that will squeeze an already bruised margin further and there may not be enough leg room for manoeuvre for auto firms.

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Auto firms put up a brave face despite falling sales