Small cars rev up auto recovery hopes

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New Delhi: Riding on the demand for small cars, lower interest rates and reduction in excise duty early this year, the passenger car industry is on a recovery path with most players witnessing positive growth for the fifth consecutive month.

While Maruti Suzuki India, the country's largest passenger car manufacturer, registered a 9.5% jump in sales at 61,773 units in June against 56,411 units in the same month last year, sales of Hyundai Motor India, the second largest manufacturer, went up 5.2% at 23,016 units as compared to 21,881 units during the same month last year. Sales of Honda Siel Cars India also grew 6.5% at 5,039 units on the back of Jazz launch last month. The company sold 4,732 units in June last year. Mahindra and Mahindra, on the other hand, reported 23.9% jump in total automotive sales at 22,526 units as compared to 18,179 units during the same month last year.

Even Tata Motors, the country's third largest passenger car maker, reported an 11% jump in sales at 19,153 units vis-à-vis 17,567 units in June last year. General Motors India, however, registered a decline of 4.1% at 4,495 units against 4,687 units in June 2008.

However, Maruti sold lesser units this month as compared to 70,785 units in May, primarily because of a week-long closure of the company's plants for maintenance.

Hyundai notched 23,503 unit sales followed by Tata Motors at 16,563 units, M&M 16,581 units and Honda Siel Cars India 4,073 units.

“Though the domestic growth curve remained flat in the first half of 2009, we hope that in the coming Budget too, the government will continue its initiatives which it had taken to support the domestic market. The government must also take steps to boost exports,” Arvind Saxena, senior vice-president, Hyundai Motor India, said.

“Generally, sales decline a month before the Budget. But this time, as the budget is slated for July, June sales were good largely because of several new launches in the small car segment, including Maruti A-Star and Ritz and Jazz from Honda, in the last few months,” says a Mumbai-based analyst.

“Moreover, since the demand for automobiles have started picking up after reduction in Cenvat in December last year along with other incentives in January, it is unlikely that there would be further reduction in excise duty on smaller cars,” he said.