Buyers return to petrol cars in slow festive season

Written by Roudra Bhattacharya | New Delhi | Updated: Nov 18 2012, 07:56am hrs
Alto 800 leads the petrol pack with over 43,000 bookings

The popularity of low-priced petrol car models that were launched this festive season has brought petrol cars back on the Indian buyers' shopping list after over a year. Another push toward petrol variants has come with a hike in diesel prices, and an anticipation of more such hikes in the future.

The biggest credit goes to the new version of the top-selling car in the market, Maruti Suzuki's Alto 800, which seems to have almost single-handedly raised the demand for petrol cars from a deep slump. Bookings since its launch on October 16 have crossed 43,000, apart from retail sales of 26,000 units.

Apart from the Alto, the Wagon R is also being picked up by dealers more this time, indicating a growth in petrol car demand after the recent rise in diesel prices. Diesel cars are still popular, but we're possibly seeing a moderation or plateau in demand for them. A trend will be clearer by November-end, a senior Maruti official told FE. With a 40% share (April to October, 2012) of the A2 minus segment, a dip or increase in Alto sales can move the market.

Second-largest domestic car maker Hyundai also said all its petrol models, including the Eon, i10 and Santro, seem to be back in vogue. We are seeing a growth in volumes this festive season. The growth is led by diesel variants with a resurgence now visible in petrol variants too. We hope this trend will continue even after, said Rakesh Srivastava, vice-president, marketing and sales.

Apart from Maruti and Mahindra, growth in October for most major car makers has been below expectations because of depressed consumer sentiments following high interest rates and rising fuel prices. Festive demand began with the Navratras on October 16 and is expected to continue till end-November.

With 2011 being a bad year for festive sales as well, this year's growth is probably best judged when compared to the good show of 2010. The usual norm is a 20-25% higher demand (for October-November) versus other months.

Maruti saw sales in October jump 86% overall to 96,002 units, though a majority of this growth is attributed to a very low base of October last year when the car maker sold only 51,458 units following a plant shut down due to a labour strike.

Discounts also played a major role in pushing sales. With only a petrol car portfolio, Honda, which offered discounts from R20,000 (Brio) to R1.15 lakh (Accord), saw sales jump 46% in October to 8,085 units.

Make no mistake though, diesel cars still continue to rule the roost. Utility vehicle major Mahindra's strong 43% growth in the month at 26,932 units provided a much needed boost to the industry. Displacing Tata Motors as the third-largest passenger vehicle maker, Mahindra's sales were also aided by the strong demand for its newly launched Quanto compact SUV.

Similarly, Renault clocked highest-ever sales to 6,790 units, of which the popular Duster compact SUV accounted for 5,406 units. Though Tata Motors' utility vehicle sales (Sumo/ Safari/ Aria/ Venture) were up 12% to 4,675 units, its overall sales fell 16% in October to 21,119 units largely on slow demand for the Indica and Indigo ranges.

While Toyota Kirloskar saw sales jump 14% to 12,281 units largely on demand for diesel vehicles such as the Innova and Fortuner, the two American car makers both saw a decline. General Motors reported a 33% drop in sales in October at 6,754 units, while Ford saw a 6% drop at 7,577 units.