Demand, cheaper loans drive Dec car sales up 40% in India

Boosted by a high demand and the availability of cheaper finance options, passenger car sales in December posted a growth of 40 per cent, over the same month last year.

According to the Society of Indian Automobile Manufacturers (SIAM), car sales in the last month of 2009 stood at 115,268 units compared with 82,174 units in the same month of the previous year.

Meanwhile, the overall domestic vehicle sales in the month crossed the one-million mark while rising 67.5 per cent.

CV segment

Cementing the recovery of the domestic auto industry, the commercial vehicles (CV) sector grew 172 per cent from the extremely low sales in December 2008.

A slowdown in industrial activity and a difficult financial situation, had resulted in very low sales numbers for the segment in that month. As a result, manufacturers had cut production levels to match the dip in demand.

“Compared to 2008, the growth may seem very high, but on a two-year basis the sales growth is normal. There is still a long way to go before we reach 2007 levels,'' said Dr Pawan Goenka, President, SIAM.

Tata Motors kept the lead in the CV segment with a sales growth of 143 per cent at 29,310 units, while Ashok Leyland and Mahindra sold 5,536 and 7,665 units respectively.

Passenger vehicles

The umbrella passenger vehicle segment, which includes utility and multi-purpose vehicles (MPVs), besides passenger cars, grew 50 per cent overall.

The largest domestic carmaker, Maruti Suzuki posted a 36.5 per cent rise in sales at 71,000 units, while Hyundai maintained its second position with a growth of 43 per cent at 22,252 units.

Meanwhile, the two-wheeler segment rose 67 per cent, while the three-wheeler segment posted an even stronger growth at 84 per cent.

Hero Honda remained the biggest player in the two-wheeler segment, posting a rise of 76 per cent at 368,034 units.

It was followed by Bajaj Auto, which posted a 136 per cent sales growth at 146,407 units.

“The growth in the last quarter may not be as high, as sales in the last quarter of 2008-09 had started picking up. The only concern would be if the stimulus package is rolled back, which I don't think the government should do,'' said Mr Goenka.

He added that growth in the next fiscal would be in double digits.

Clarity needed

Commenting on the new emission norms that are slated to come into force by April 1, Mr Goenka said that it should be delayed by up to three or six months as there is concern over the availability of the fuel and the distribution infrastructure.

According to the current Government regulation, from April onwards, 14 major cities would have to switch to the tighter Bharat Stage IV emission norms, from the current BS III norms. Meanwhile, the rest of the country would switch over to the BS III norms.

“There is a concern that the fuels may not be available throughout the country by the time the new emission norms are implemented. We have made representations to the Government to postpone the date by up to three or six months in the regions where the fuel may not be available in time,” said Mr Goenka.

He added that clarity on the issue is needed by the end of the month, as automakers had already invested in the tooling and new technologies required to meet the norms.

If the Government decides to revert any later than January, it would be difficult for the auto companies to revert to the old standards and they may incur some losses

India car.com Source : Business Line (Online Edition) (1/8/2010)