The Indian automobile industry is yet to recover from the high-interest-rate blues. Though passenger cars sales went up by a marginal 2.31% in February, sales of motorcycles declined by 17.68%, thus bringing down the overall vehicle sales by 10.34%. While manufacturers attribute this to customers postponing their purchases till March in anticipation of a reduction in excise duty, experts feel that the volumes will go up substantially after a 4% reduction in excise duty and subsequent reduction in prices.

According to the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales clocked a marginal improvement at 94,756 units during March, against 92,618 units in the same month in 2007. Market leader Maruti Suzuki India Ltd registered an increase of 2.16% at 51,762 units, against 50,666 units during the same month in 2007. However, rivals Hyundai Motor India Ltd (HMIL) and Tata Motors witnessed a negative growth of 5.45% and 16.02% respectively. HMIL sold 14,591 units during February as against 15,432 units in 2007, while sales of Tata Motors was down at 13,451 units. General Motor India, however, witnessed a nearly three-fold jump in sales at 3,691 units.

The total two-wheeler sales in February declined by 14.25% to 5,42,578 units, compared to 6,32,712 units during March 2007. Motorcycles continued to witness a fall in demand with the segment registering a dip of 17.68% at 4,25,089 units, against 5,16,410 units in 2007. Sales of Hero Honda motorcycles declined by 7.51% to 2,47,735 units, Bajaj Auto saw a dip of 26.51% at 1,07,768 units and that of TVS Motors also fell by 44.12% to 35,410 units.

However, industry firms are optimistic that volumes will improve marginally from March onwards, after the reduction in excise duty from 16% to 12%. “While the liquidity crunch will continue to weigh heavily on the two-wheeler industry, the 4% reduction in excise duty will surely see a marginal growth in overall volumes,” says R Chandramouli, vice-president, TVS Motor Company.