Mumbai: Led by cars, India’s auto sales rose in May from the year-ago period, which was dogged by a religious custom that barred the purchase of big-ticket items.
Sale of cars, trucks and two-wheelers rose 8% in May this year to a total of 852,872 vehicles, according to data from the Society of Indian Automobile Manufacturers (Siam), an industry body.
The latter half of May last year coincided with an inauspicious period in the Hindu lunar calendar. People avoid buying cars and motorcycles during that period, which occurs once in four years.
Car and utility vehicle sales were up almost 17% this May from the year-ago period as consumers, with a bit of extra savings from lower income tax rates this year, bought new models. Sales of two-wheelers, which had fallen all of last fiscal year, gained 7% during the month.
The growth in auto sales during May was, however, slower than the 10% year-on-year rise in sales in April, indicating that rising inflation, record high interest rates and a credit crunch in vehicle financing have continued to crimp sales in Asia’s third largest vehicle market.
With loan defaults expected to gallop as the economy is starting to cool and inflation rising, and lenders barred from using arm-twisting clients to pay up bad loans, banks are becoming more and more reluctant to provide vehicle financing.
Worse, India’s oil ministry last week increased the retail price of petrol and diesel by about 10% to counter the impact of spiralling crude oil prices on domestic oil marketing companies.
The impact of this is likely to be seen in the coming months as consumers may either shift to smaller, more fuel-efficient cars or stay out of the market altogether and use more public transport.
“First-hand car buyers could postpone their purchases because of a hike in fuel prices,” said Vaishali Jajoo, automotive analyst at Angel Broking Ltd. “This would affect the sales volume of entry-level cars.”
But, in May, auto makers haven’t done too badly. Hyundai Motor India Ltd grew the most, its sales rising by 47% to 24,510 cars compared with a year ago, thanks to continuous demand for its i10 small car, which averages 10,000 units a month.
Sales at car and truck maker Tata Motors Ltd, which last week completed its acquisition of British brands Jaguar and Land Rover from US-based Ford Motor Co., rose 23% in May due to strong sales of its Indigo, Sumo and Safari models. Maruti Suzuki India Ltd, which makes half the cars sold in the country, increased its sales by 15% to 64,143 cars.
In two-wheelers, sales at market leader Hero Honda Motors Ltd gained more than 10%, on the back of new launches such as the Splendor NXG and the 150cc Hunk.
However, sales for both No. 2 bike maker Bajaj Auto Ltd and third placed TVS Motor Co. Ltd remained flat in May compared with the year-ago period.