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Two-wheeler sales keep falling; demand for high-end cars grows

Two-wheeler sales keep falling; demand for high-end cars grows
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First Published: Sat, Jun 02 2007. 02 57 AM IST

Updated: Sat, Jun 02 2007. 02 57 AM IST
Mumbai: Two-wheeler sales continued to decline for the third straight month as higher loan rates and a Hindu religious belief prevalent in rural areas about not buying vehicles in an inauspicious period forced customers to defer purchases.
Hero Honda Motors Ltd, the country’s largest two-wheeler maker, reported a 6% drop in sales to 285,108 units, compared with a year ago. Rivals Bajaj Auto Ltd and TVS Motor Ltd also reported a 13% and 12% fall in May sales, respectively. “Tightening of credit availability has been affecting the sales of entry-level bikes in the last two months. Besides, a one-month inauspicious period that started mid-May impacted sales,” said Amit Kasat, senior analyst at Motilal Oswal Securities Ltd.
The 4% increase in lending rates over the last six months has impacted sales of two-wheelers. In March and April, sales of motorcycles and scooters declined 0.5% and 6%, respectively, compared with double-digit growth for the past four years.
According to the Hindu lunar calender, one extra month called Adhik comes once in four years. This year, it started from 14 May and will end on 13 June. It is considered to be inauspicious and impacts sales in semi-urban and rural market, which constitute the biggest market for two wheelers.
Sales of cars and utility vehicles, however, grew this May over a year ago, riding on new launches in the larger-car segment. But lending rates have dampened growth in small-car sales—these are usually bought by first-time buyers.
Maruti Udyog Ltd, the largest car maker in the country, sold 55,952 vehicles in May this year, up 10% up from a year ago. Sales of its small cars such as the Alto and WagonR grew only 7%, compared with doubling of sales in the mid-sized segment, where the company launched the SX4 sedan a month ago. Tata Motors Ltd, India’s largest auto maker by revenues, sold 17,580 passenger vehicles in May, down 3% from a year ago despite the launch of a new variant of the Indigo with a newer engine.
Mahindra and Mahindra Ltd (M&M) sold 17,314 vehicles in May, up by 49% on the back of the rise in demand for its utility vehicles and the sale of its newly launched car, Logan, in a joint venture with French car maker Renault SA.
“Maruti and M&M results show a good demand for the mid- and high-end vehicles. We expect Maruti to achieve 10-12% of growth in this financial,” said Umesh Karne, senior research analyst, Emkay Share and Stock Brokers Ltd.
Among other car makers, Honda Siel Cars India reported a 16% growth in sales to 4,811 units, as demand grew for its City and Civic sedans. The local unit of General Motors Corp. reported a 56% growth in sales to 5,432 vehicles. Growth was led by the Chevrolet Spark, which the company launched in April. The Spark sold 2,000 units in April.
ravi.k@livemint.com
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First Published: Sat, Jun 02 2007. 02 57 AM IST
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