Spike in auto sales gives part makers relief

Spike in auto sales gives part makers relief
Comment E-mail Print Share
First Published: Thu, Mar 05 2009. 10 42 PM IST

Updated: Thu, Mar 05 2009. 10 42 PM IST
Mumbai: Pawan Sabharwal and his colleagues at Subros Ltd, a Noida-based supplier of air-conditioning systems to Maruti Suzuki India Ltd and Tata Motors Ltd, are working 24x7 to meet new production schedules at car factories.
Sabharwal, Subros’ head of sales and marketing, said his firm’s supplies to Maruti and Tata Motors in the March quarter will rise by at least 50% and 25%, respectively, compared with the three months to December. “We have been extremely busy meeting production schedules for the car makers since January. We have started working even on Sundays to cope with the spurt in demand,” he said.
Also See Volumes Game (Graphic)
Car and two-wheeler sales rose at a healthy clip in February, helped by lower sticker prices, cheaper financing and purchases by government workers, raising hopes that the worst may be over for auto makers. A slowing economy, coupled with rising interest rates, had resulted in sales falling in each of the months since July, except in September, when manufacturers increased dispatches to dealers anticipating expansion of demand in the festive month of October.
Maruti, India’s largest car maker, said it sold 70,625 cars in the country in February, an increase of 19.1% compared with the same month last year. Hyundai Motor India Ltd saw domestic sales and export orders increase in February from a year ago, selling 21,215 cars in India in February, an increase of 45.3%. Export orders were up 18.3% to 17,039 units.
“While I cannot comment on the exact numbers, we are targeting a big number this month,” said I.V. Rao, managing executive officer, engineering, Maruti Suzuki. “Last two months have been very encouraging. Retail sales have picked up, which means people are actually buying cars.”
But many in the industry said this growth may not be sustainable. Arvind Saxena, senior vice-president at Hyundai Motors India, said that he expects only a 10% growth in March sales over February and that the current exuberance will be short-lived. “There’s nothing great about the January and February sales as they are results of the inventory liquidation and low base of last year. It is not a like-to-like comparison. The overall volumes have yet to reach last year’s level,” Saxena said.
Deepak Jain, executive director of Delhi-based Lumax Industries Ltd that supplies tail lamps and headlights to car and two-wheeler makers, said there’s been an overall increase in demand of 10-15%. He is, however, unwilling to read too much into it. “I think it’s premature to believe things are back in track,” Jain said. “The last quarter of the fiscal historically has been better than the remaining ones. The actual test would be the Q1 of next fiscal. If the demand continues till then, one (would have) reason to feel happy. GDP growth at 5.5% is dismal and if it continues, we have not seen the worst yet.”
Munish Malhotra, general manager, sales and marketing at Gurgaon-based auto parts manufacturer QH Talbros Ltd, echoed similar sentiments though production has increased at his firm. QH Talbros, which had reduced the number of production shifts from three to one, has resumed three shifts.
S.K. Behera, managing director of Jamshedpur-based RSB International Ltd, which supplies parts to Tata Motors, said there is a marginal increase in demand from commercial vehicle makers. “As fleet owners continue to face difficulty in getting finance from banks, and as freight volumes (are) not picking up, I doubt if this demand is sustainable,” he said.
Siddhartha Lal, managing director and chief executive of VE Commercial Vehicles, a joint venture between Eicher Motors Ltd and AB Volvo, had recently said that though the worst must be over, there’s still a rough road ahead for the commercial vehicles industry. Commercial vehicle sales in January halved to 23,157 units from a year ago.
Graphics by Sandeep Bhatnagar / Mint
Comment E-mail Print Share
First Published: Thu, Mar 05 2009. 10 42 PM IST