Vehicle sales hit 11-year low in December

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New Delhi: The automobile industry reported its worst numbers in recent history for December. Poor sales of commercial vehicles and two-wheelers dragged down vehicle sales by 18.2% to 5,97,622 units, from 7,30,603 a year ago.

Two-wheelers make up 77.2% and commercial vehicles 2.9% of monthly auto sales.

The cumulative sales of all categories for April-December remained flat at 72,23,610 units against 71,96,613 units in the same period in 2007. Before this, the worst performance was in November 2008, when sales declined 17.98% to 7,11,281 units.

The auto sector, identified by the government as troubled, received attention in two stimulus packages. While the first reduced excise duty by 4% across the board, which helped compact cars reduce prices, the second package of January 2 gave specific incentives aimed at lifting the sagging sales of commercial vehicles.

According to the Society of Indian Automobile Manufacturers, commercial vehicles posted the worst sales in December in the last 11 years as the sector saw a dip of 58.28% at 17,920 units in December 2008 against 42,961 units a year earlier. In July 1997, the sector had declined by 51.76%.

Siam feels this year would be more difficult for the industry. “The government’s stimulus package for the auto sector, specially the commercial vehicle segment, has not yet yielded results and 2009 is going to be even tougher,” says Sugato Sen, senior director, Siam.

“Since sales have worsened, more measures are needed to revive demand when the sentiments are so low. The industry has gone into the reverse gear,” adds a Mumbai-based analyst.

Even two-wheelers recorded their worst performance in December with a decline of 15.4% at 4,61,302 units vis-à-vis 5,45,485 units in December 2007. Motorcycle sales declined by 22.9% at 3,35,820 units against 4,35,925 units in the year-ago period.

Hero Honda Motors, the country’s largest two-wheeler manufacturer, saw a dip of 12.7% at 1,97,364 units against 2,26,103 units in December 2007. While Bajaj Auto, the second largest player, registered a dip of 55.3% at 61,546 units against 1,37,980 units in the same month previous year, sales of Chennai-based TVS Motor went down by 38% at 23,832 units in December last year as against 38,767 units in the same month in 2007.

Though passenger cars posted a dip of 6.9% at 82,105 units compared to 88,272 units a year ago, the decline is better than the earlier estimated dip of 15%.