Cars, bikes off the mark, trucks wont budge

Written by fe Bureau | New Delhi | Updated: Mar 11 2014, 11:12am hrs
Car sales in February rose for the first time in four months on the back of successful recent launches and excise duty cuts, but the overall auto sector remained a mixed bag with utility vehicle and commercial vehicle (CV) sales in the red.

Vikram Kirloskar, president of the Society of Indian Automobile Manufacturers (Siam) and vice-chairman of Toyota Kirloskar Motors, said that improving car and two-wheeler sales should act as a catalyst for growth in other sectors as well. We have seen some improvements in inquiry levels after excise duty cuts in the interim Budget last month and so we expect strong sales in March and April on the passenger vehicle (PV) side. We hope it is an indicator of better times ahead.

He added, But CVs are on a tough wicket and will not improve unless we see increased goods movement. Many projects are being cleared right now and there have been small improvements in GDP, so it should take about 5-6 months for CV volumes to pick up.

In February, passenger car sales posted a modest rise of 1.39% (to1.6 lakh units) while utility vehicle sales fell 9% (to 43,507 units), dragging the overall passenger vehicle segment (including cars, utility vehicles and vans) growth down by 3.9% (to 2.17 lakh units). Maruti Suzuki, which has an over 40% share of the PV segment, posted an almost 2% rise in volumes on the back of strong demand for its Celerio small car. Rival Hyundai saw flat sales while M&M and Tata Motors recorded 20% and 33% lower volumes, respectively.

Car sales are up in the month, but we can't say it is the beginning of a trend just yet. Excise duties are expected to go back to previous levels from July unless the new government continues the incentive, but we hope sales will continue to maintain pace nevertheless, Vishnu Mathur, director-general of Siam, said.

Two-wheeler volumes in the month were up almost 10%, boosted by a 28% jump in scooter sales at (3.11 lakh units) though bike sales only rose 5.4% (at 8.43 lakh units). Hero MotoCorp recorded just over 1% growth while rival Honda saw a 46% jump in volumes. Bajaj posted a decline of 12.5% in sales while TVS saw 3.35% growth.

CV sales in the month fell a sharp 30%, dragged down by 24% lower sales of medium and heavy CVs (to 16,372 units) and 32.5% fall in light CV demand (to 31,610 units). Market leader Tata Motors saw a 42% drop in CV sales while M&M recorded 4% growth. Ashok Leyland saw volumes drop 28%.

It seems that government incentives have had some effect on passenger car sales, albeit a rather small effect so far. Commercial vehicle numbers, on the other hand, indicate that the urgent need to fix the basics of India's economic model has not abated. This will be the key task for the incoming government, and decisive action on the part of the new government will lead to an improved situation over the next 12-18 months, said Dr Wilfried Aulbur, managing partner at Roland Berger Strategy Consultants.