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  1. Trucks turn the corner, cars ride steady in Jan

Trucks turn the corner, cars ride steady in Jan

Tata Motors, ALL see strong sales on uptick in infrastructure, manufacturing

By: | Mumbai | Published: February 3, 2015 1:08 AM

A gradual recovery in the manufacturing and infrastructure sectors, declining fuel prices and a slew of new car launches saw commercial and passenger vehicle makers register healthy growth in sales in January when compared to the same month a year earlier.

Tata Motors and Ashok Leyland registered strong sales growth in the medium and heavy commercial vehicle (MHCV) segment thanks to improvement in the abovementioned sectors, where their vehicles are deployed. Declining fuel prices aided operating margins of commercial fleet operators, leading to higher sales for these automobile firms.

The medium and heavy commercial vehicle segment of Tata Motors recorded 38% year-on-year growth to 11,273 vehicles in January. Ashok Leyland posted 45% year-on-year growth in the same segment to 8,005 units.

“The MHCV (medium and heavy commercial vehicles) market will continue to do well in coming quarters. With declining fuel prices, fleet owners are operating at higher margins and most of the truck owners are replacing their old trucks with new ones,” Yashesh Mukhi, auto sector analyst at Morgan Stanley said.

Unlike in the heavy commercial vehicles segment, Tata Motors’ and Ashok Leyland’s sales performance in the light commercial vehicles (LCV) market showed divergent trends. While Ashok Leyland posted 14% year-on-year growth in LCV sales in January, selling 2,634 vehicles, India’s largest commercial vehicle manufacturer Tata Motors registered an 18% decline in the segment.

“Slowdown in the LCV segment is the result of non-availability of finance for prospective buyers of such vehicles, who are mostly independent owners with medium to low credit profile”, Mukhi said. LCVs are typically used by small and medium transporters to ferry goods over short distances, such as within a city. Due to depressed economic conditions, the businesses of many such LCV owners aren’t doing well, leading to stress in their ability to repay debt.

The passenger vehicle segment, on the other hand, has shown recovery signs with the January data.

Among passenger car makers, India’s largest carmaker Maruti Suzuki registered 7.90% growth in sales with 89,014 cars.

Tata Motors, which has seen its passenger car market share decline over the last few years, saw healthy growth in the number of cars as a result of strong demand for its new launches like the Zest and the Bolt.

Car-sale

“The passenger vehicle segment is doing well despite the hike in excise duty and this trend is likely to continue in the coming quarters as well” said Aswin Patil, auto sector analyst at LKP research.

Tata motors sold 13,047 vehicles in January, up 19% over the same month in 2014. Toyota Kirloskar, another carmaker to report is numbers on February 1, sold 12,650 vehicles, registering growth of 16%.

While the passenger and commercial vehicle segments appear to have done well in January, tractor sales for India’s largest tractor manufacturer Mahindra and Mahindra (M&M) declined significantly during the month.

M&M’s tractor sales in January declined 26% year-on-year to 13,852 units.

“The tractor industry has been going through a de-growth caused due to reduced Kharif crop production and lower mandi prices,” Rajesh Jejurkar, chief executive of M&M’s farm equipment division said in a statement.

“However, at Mahindra we have seen a positive trend in exports, which have grown by 47% during January 2015.”

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