1. Car sales down in Feb, Jat stir hits dispatches

Car sales down in Feb, Jat stir hits dispatches

Passenger vehicle market remained flat at 0.6% growth in Jan; M&M only auto major to record 26% growth

By: | Mumbai | Updated: March 2, 2016 12:48 AM

Passenger vehicle sales continued to move in the slow lane for the second consectuive month (February) of the current calendar as the top five carmakers in the country put together a muted growth of 0.95%.

The passenger vehicle industry which has seen a patchy recovery in recent months would come under more pressure as prices of vehicles are set to go up for the second time in a span of two months with the introduction of an infrastructure cess of up to 4%. Car-makers had increased car prices in the range of 2-3% in January, citing higher input costs.

The passenger vehicle market remained flat at 0.6% growth in January while the passenger car segment has seen a contraction in volumes after fourteen month of growth.

While Jat reservation agitation in Haryana took a toll of over 10,000 units on market leader Maruti Suzuki’s production in February, sales of other major players like Hyundai, M&M, Honda Cars and Tata Motors remained in line with their January performance.

With new launches like KUV100 and TUV300 in recent months to its rescue, M&M was the only major player to record strong double-digit growth at 26%, while Korean car-maker Hyundai came second at 9.1% after being over 20% range for six straight months. Honda Cars and Tata Motors continued with negative growth in passenger vehicle sales for fourth consecutive month. Maruti Suzuki saw a decline of 11% in the entry-level mini-segment which constitutes close to one-third of its total sales volume.

Though with smaller volumes, French car-maker Renault remained the only outlier with a growth of 158%, which it is gaining from the high demand for its entry-level hatch Kwid.

Analysts believe that though the slow growth in sales is in line with consumer behaviour in the January-March quarter, this time around slack rural demand is also hurting the industry. “Generally customers follow wait and watch approach while purchasing vehicles especially in the first quarter of the year,” Abdul Majeed, partner at Price WaterHouse said, adding that the gloom in the rural economy continues to impact sales of two wheelers and small car segment.

On the two-wheeler front, Hero MotoCorp posted a domestic sales growth of 13.7%, which is its only second double digit growth in the current financial year, the last being in October. Hero has been able to raise its domestic sales volumes mainly due to the increasing penetration of its scooters in different regions in the country.

Meanwhile, demand for commercial vehicles was reasonably strong with fleet owners adding to their fleet. Ashok Leyland saw a growth of 34.54%, driven by the 31% growth in its sales of medium and heavy commercial vehicles.

Tata Motors too saw a growth of 15.1% year-on-year, with 22% growth in medium and heavy vehicles and an 8% growth in the light commercial vehicle segments. M&M also saw a strong growth of 15.2% y-o-y in the light commercial vehicle domestic sales taking its commercial vehicle sales growth to 16%.

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