Excise duty cuts shore up car sales in March

Written by fe Bureau | New Delhi/Mumbai | Updated: Apr 2 2014, 10:05am hrs
Car sales in March saw a bit of a revival on the back of excise duty cuts announced by the government, setting the tone for a more significant improvement in the next few months. After posting the lowest growth rate in over a decade, India's car market is expected to revive in 2014-15 as a new government takes charge, economic growth gets back on track and consumer sentiments improves, leading to pent-up demand coming back to the market.

Successful new launches ruled the roost across carmakers and largely accounted for the growth of the industry. Market leader Maruti Suzuki saw a 5% year-on-year (y-o-y) drop to 1.02 lakh units due to the high base of last year, but the strong success of its new model, the Celerio compact, helped the company improve volumes 2.5% over February. Hyundai, for which the Grand i10 has been a good hit, recorded 3.4% higher sales y-o-y at 35,003 units and a similar jump over February.

Rakesh Srivastava, senior VP, sales and marketing at Hyundai Motor India, said, Post the reduction of excise duty and with the strong performance in the compact segment, Hyundai registered March sales of 35,003 units with growth of 3.4% over the corresponding month, indicating a build-up of positive momentum.

Similarly, Honda's recent successful launches, like the City and Amaze sedans both of which feature a diesel engine for the first time helped the company record its highest-ever monthly sales in March at 18,246 units. Honda's car sales are up 83% at 1.34 lakh units in FY14. Ford also recorded a 20% jump in March volumes to 6,356 units on the back of the EcoSport compact SUV.

Cautious is how we should define the first quarter of 2014. The excise duty reduction has definitely been a positive step. As India gets set to vote, we look forward to such industry-friendly initiatives being sustained to support the important automotive sector, said Vinay Piparsania, executive director of marketing, sales and service at Ford India.

Among the other major players, M&m saw March volumes dip 9% y-o-y to 23,433 units, though sales rose over 21% over the previous month. Tata Motors, however, saw a sharp 44% decline to 12,640 units, continuing its poor performance.

Pravin Shah, chief executive, automotive at M&M, said, After the reduction in the excise duty across segments, the auto industry has seen the level of inquiry going up, but has not witnessed any major surge in sales. We do hope sentiment improves and changes post the national elections, leading to an increase in demand as well. Going forward, we continue to be optimistic on the future and expect to witness growth momentum in FY 2014-15.

Meanwhile, Toyota Kirloskar saw a 58% drop in its March volumes to 8,206 units on the back of labour trouble at its plants near Bangalore. Nissan more than doubled its volumes on the back of the Terrano SUV to 7,019 units in March.

(With inputs from the Bangalore bureau)