Sales of entry-level cars dip in August; 2-wheelers upbeat

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New Delhi, Sep 1: 2007, analysts feel that the overall low sentiments have impacted the entry-level and compact car segment the most.

"Inflation has breached the 12% mark and the interest rates are hovering at an all-time-high of 14-15%. As such, the entry-level car buyers, who have limited funds to manage their day-to-day affairs, have postponed their buying decision. This has impacted the sales of entry-level and compact cars," says an industry expert.

In contrast, two-wheeler sales have surged last month, with all leading players seeing a positive growth. Hero Honda Motor Company, India's largest two-wheeler manufacturer with a market share of 55%, registered a 26.8% growth in sales at 3,05,516 units in August compared with 2,40,875 units in the corresponding month last year. Similarly, sales of Bajaj Auto went up by 4% at 1,76,631 units vis-à-vis 1,70,203 units. Chennai-based TVS Motors also saw a growth 11% in total two-wheeler sales at 1,14,321 units against 1,02,734 units.

"The agriculture has been good this year and with the waiver of farm loan happening, there is ample cash in the hands of people in rural India. Since this class constitutes a huge part of the total two-wheeler sales, the demand for motorcycles has also gone up," says a Mumbai-based analyst.