Slow start for car sales in 2015, excise hike hits demand in January

By: | Published: February 2, 2015 6:51 PM

Hit by price hikes following withdrawal of excise duty concessions, car sales in India began on a tepid note...

cars, car sales, car sales 2015, car sales in 2015General Motors India reported a 16.01 per cent decline in sales at 4,667 units in January as against 5,557 units in the same month last year. (Reuters)

Hit by price hikes following withdrawal of excise duty concessions, car sales in India began on a tepid note this year with main players Maruti Suzuki and Hyundai posting single digit growth in January, while others like GM India and Ford saw decline in sales.

Tata Motors and Honda Cars India were, however, exceptions posting healthy double-digit growth rates during the month.

Maruti Suzuki India’s domestic sales increased by 9.3 per cent in January to 1,05,559 units as against 96,569 units in January 2014.

Sales of its bread and butter mini segment cars, including, Alto and WagonR, declined by 7.3 per cent to 35,750 units, while compact segment comprising Swift, Estilo, Ritz and Dzire rose by 7.5 per cent to 45,881 units in January.

The sales of company’s mid-sized sedan Ciaz, which was launched in October 2014, stood at 6,005 units.

Rival Hyundai Motor India Ltd (HMIL) saw its domestic sales market grow by 4.1 per cent to 34,780 units last month as compared to 33,405 units in January 2014.

HMIL Senior Vice President (Sales and Marketing) Rakesh Srivastava said during the month the industry faced “stiff challenges of increasing cost of ownership on account of increase in excise duties”.

General Motors India reported a 16.01 per cent decline in sales at 4,667 units in January as against 5,557 units in the same month last year.

Commenting on the sales performance, General Motors India Vice President P Balendran said: “The withdrawal of excise duty benefits has significantly affected demand during the previous month. High interest rates and weak economic fundamentals continue to put pressure on car purchases.”

Homegrown utility vehicle Mahindra & Mahindra’s (M&M) domestic sales declined by eight per cent to 37,045 units last month as against 40,324 units a year earlier.

“The first month of 2015 has not been encouraging as the effect of the withdrawal of excise duty subsidy is clearly evident,” M&M Chief Executive (Automotive Division) Pravin Shah said.

“Unfortunately, the segmented recovery which we were witnessing over the last couple of months has been impacted with the excise duty change,” he added.

The government had decided against extending the excise duty concessions given to the auto and consumer durables sectors after the expiry on December 31, 2014 and it led to an increase in excise rates by up to 4 per cent. Subsequently, auto companies had passed on the burden to customers from January.

However, Tata Motors, riding on its new models Bolt and Zest, reported a growth of 18.89 per cent in its domestic passenger vehicles sales in January in the domestic market at 13,047 units, up from 10,974 units in the same month last year.

Auto sales, four wheeler sale, Honda, Maruti Suzuki

Honda Cars India Ltd (HCIL) also reported 16.65 per cent increase in domestic sales at 18,331 units in January 2015 as against 15,714 units in the corresponding month last year.

On the other hand, Ford India reported a marginal decline in domestic sales in January at 6,647 units as against 6,706 units in the same month of last year.

Commenting on the sales performance, Ford India Vice President (Marketing, Sales & Service) Anurag Mehrotra said: “The rollback of excise duty concessions has further contributed to the prevailing low consumer sentiment.”

He said while the auto industry welcomed RBI’s recent move to reduce interest rates, a lot more needs to be done to restore the sector on a growth trajectory.

“We hope that the government will continue its pro-consumer, industry-friendly reform policy and introduce measures to boost demand in the upcoming budget,” Mehrotra said.

In the two-wheeler segment, market leader Hero MotoCorp witnessed a marginal decline in January 2015 at 5,58,982 units as against 5,61,253 units sold in the corresponding month last year.

Rival Honda Motorcycle & Scooter India (HMSI) reported 14.24 per cent growth in total sales for January 2015 at 3,93,787 units as against 344,678 units in corresponding month of 2014.

Bajaj Auto reported 12 per cent decline in motorcycle sales at 2,46,955 units in January 2015 as against 2,81,390 units in the year ago month.

Chennai-based TVS Motor Co said its domestic two-wheeler sales stood at 1,62,284 units in January, up 3.93 per cent, from 1,56,138 units in the year-ago period.

Yamaha Motor India reported 20.82 per cent rise in domestic two-wheeler sales at 39,309 units during the month as against 32,534 units sold in January 2014.

Niche bike maker Royal Enfield said its January sales were at 28,927 units as against 20,232 units in the same month last year, up 43 per cent.

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