Mumbai: The harvest period in various parts of India and the start of the wedding season have helped boost auto sales by 9.8% in April in Asia’s third largest vehicle market, according to data from the Society of Indian Automobile Manufacturers, an industry body. And sales of two-wheelers have bounced back 8% after 12 straight monthly declines.
Despite the gains in April, vehicle makers will continue to face tough market conditions in the year ahead, say analysts.
India’s inflation, which hit a new high of 7.57% in the week ended 19 April, the highest in three years, will continue to influence credit norms for the worse in a country where half of all bikes and almost 70% of passenger vehicles are bought through loans.
Rising input costs such as steel, which has risen 40% in the last 12 months, will also hurt profitability of vehicle makers and force them to up prices.
Sales of passenger vehicles during April rose 21.2% to 130,013 units from a year ago, mostly riding on sales of new models such as Maruti Suzuki India Ltd’s SX4 and Dzire sedans and Hyundai Motor India Ltd’s i10 small car. Meanwhile, two-wheeler sales rose to 616,038 units, as the country’s largest bike seller Hero Honda Motors Ltd posted double-digit gains in April.
Maruti Suzuki, which makes half the cars sold in India, increased sales to 59,539 cars and utility vehicles, a rise of 22.4% over April 2007. Sales at Hyundai Motor Co.’s local unit rose 36.7% to 21,501 cars in April from a year ago. Tata Motors Ltd, the country’s largest vehicle maker by revenue, sold 2.8% fewer vehicles in the month, with sales of the company’s flagship Indica model flagging.
“The effects of excise duty cuts were seen in sales during March and is again being reflected in sales during April. The festive season also helped sales during the month,” said Neeraj Bandhu, manager (South Asia), who handles vehicle forecasts at auto consultancy CSM Worldwide.
India’s finance minister P. Chidambaram had reduced excise duties on small cars and two-wheelers by 4 percentage points in his budget for the current fiscal year, in an attempt to revive the industry that was reeling under tight credit conditions and high input costs. He also reduced income taxes, giving consumers more cash to save.
Typically, farmers flush with cash after the harvest and parents-in-law eager to pamper prospective sons-in-law with expensive gifts tend to make up for the bulk of the purchases in this period.
Among two-wheeler makers, the Top 3 sellers posted gains in April. Hero Honda was the biggest gainer as its sales rose 10% to 282,412 units, thanks to the strong performance in the premium segment riding on the success of such models as CBZ X-treme and Hunk. The No. 2 seller, Bajaj Auto Ltd, increased sales by 8.55% to 138,810 units.
Meanwhile, TVS Motor Co. Ltd continued to lag behind its competition, though it too grew sales by 2.15% to 99,759 vehicles in April.
Tata Motors, Bajaj Auto and utility vehicle maker Mahindra and Mahindra Ltd will be reporting their quarterly and full year results later this month.