After three consecutive months of decline, sales of Maruti Suzuki India, the country?s largest passenger car manufacturer with a market share of over 50%, went up in January by 5.6%. While sales of all other players, including the second largest player Hyundai Motor India continue to be negative, does the performance of Maruti signal a reversal in trend of the total passenger car sales in the country?
Consider this: in the financial year 2007-08, sales of passenger vehicles went up by 12.17% at 15,47,985 units as compared to 13,79,979 units in April-March 2007. This double digit growth was driven by 11.99% growth in sales of Maruti in the last financial year followed by a jump of 10.87% in sales of Hyundai Motor India, 71.25% growth in sales of General Motors India and an increase of 2.41% in sales of Honda Siel Cars India. However, in the current financial year till December, sales of passenger vehicles went down marginally by 0.46% at 11,04,237 units as against 11,09,309 units in the April-December period of 2007-08. This is mainly on account of 2.66% dip in sales of Maruti in the first nine months of this fiscal followed by 1.73% decline in sales of General Motors India and 20.4% decline in sales of Honda Siel Cars. Though Hyundai Motors India grew by 19.5% in the April-December period of the current financial year, there is a possibility that the overall performance of the industry would either be flat or marginally positive.
While Maruti attributes this to high sales at the wholesale level after the company posted its highest ever retail sales in December, industry experts and analysts feel the correction in January numbers for Maruti is a temporary phenomenon and the buying sentiments continue to be low.
?We had posted the highest ever retail sales in the history of the company in December. Consequently, the stocks at the dealer end diminished and this has led to the jump in sales in January,? a company official said, adding that the good number of the newly launched A-Star, as anticipated by the company, and focused initiatives on rural markets have helped the sales figures grow. During December 2008, the company achieved a record retail sale of over 76,700 units. Since October last year, sales of Maruti were under pressure, with the company registering a negative growth 7.1% in October, 27.4% in November and 10% in December.
?The recently launched A-Star might have helped Maruti to witness a positive growth in January but the overall industry will certainly take time to turn positive as high interest rates continue to persist and despite several interventions by the government in one way or the other, banks are going slow on expanding their automobile portfolio,? says a Mumbai-based analyst.
No wonder, experts have been lowering their growth projection for the industry. From an earlier estimated growth of 10-12% in 2008-09, it was first lowered to 8-10% in October, followed by the revised target of 5-6% in November and a low single digit growth now. ?The industry will not be surprised if we end the current financial year with almost flat or low single digit growth this time vis-?-vis last financial year,? says the analyst. Agrees Arvind Saxena, senior vice-president (sales and marketing), Hyundai Motor India: ?This year (2009), as we had predicted, is going to be a very challenging year for the entire automotive industry.?
According to a banking official, despite series of rate cuts by various banks, interest rates are still high as compared to last year and this is holding back the impulse buying decision of the prospective buyers. ?Interest rates on auto loans are still up by 200-250 basis points. This, coupled with the slowdown in the economy, as well as high degree of uncertainty of jobs, has ensured that people postpone their plans of buying not so necessary items like cars,? added a banking official.