Mumbai: Motorcycle and scooter sales, expanding at a healthy clip despite an economic slowdown, helped shore up auto sales in the country in April.
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India, Asia’s third-ranked automobiles market by volume after China and Japan, sold 894,058 cars, two-wheelers, trucks and buses last month, an expansion of 10.76% over April last year, data released by industry body Society of Indian Automobile Manufacturers (Siam) shows.
Sales of two-wheelers, which account for three of four vehicles sold in the country, were reported at 700,995 units in April, an expansion of 13.71% over a year ago.
An economic slowdown and risk-averse lenders had hit auto sales, with the three months to December reporting a contraction in sales. But improved consumer spending sentiment, revival of bank lending with relatively low interest rates and new models have bucked that trend for four months in a row.
“Better credit availability that has improved consumer sentiments and new models like the Fiat Linea, Hyundai i20 and Maruti Suzuki A-star have helped car sales,” said Neeraj Bandhu, director, India, at market research and forecasting firm CSM Worldwide. Car sales expanded 4.36% to 135,697 in April, Siam said.
Still, purchase of trucks and buses continued to be lower than year-ago figures. The segment reported 11.25% lower sales at 29,842 units. Volumes in the segment were dragged down by sales of medium and heavy vehicles, which contracted 42% to 11,023 units.
Fast lane: A Hero Honda showroom in New Delhi. Two-wheeler sales stood at 700,995 units in April, an increase of 13.71% over a year ago. Rajkumar / Mint
Industrial production has contracted or has been slowing in recent months, leading to a lower demand for vehicles to move products across the country. Data released by theCentral Statistical Organisation showed that factory output shrank 1.2% in February on weak global and domestic demand. This is against a growth rate of 9.5% in the same month a year ago. Industrial output grew 2.8% during April-February, against 8.8% in the corresponding period a year ago.
Commercial vehicle sale volumes fell 40% to 49,546 in the December quarter, from 82,568 in the corresponding quarter of fiscal 2008. It has climbed from a low of 17,920 in December to a high 41,881 units in March.
While market leader Tata Motors Ltd posted a marginal improvement of 2% in its sales to 19,873 units over last year, sales at Ashok Leyland Ltd and Eicher Motors Ltd, continued to slide. Tata Motors posted sales growth after a decline for straight six months from October.
Sales at Chennai-based Ashok Leyland dropped 70% to 1,615 units. Eicher Motors, the third ranked lorry maker by volume, also saw sales skid 24.7% to 1,401 units, Siam data showed.
Manoj Mohta, head of research at Crisil Ltd, said the commercial vehicle industry has been helped by the government’s economic stimulus efforts such as excise duty benefits and paring of interest rates. But the contraction in monthly sales from the year ago may last until end of this fiscal year, he said.
“We may see some revival on a year-on-year basis in the form of improved despatches in the second half,” Mohta said. “However, on an aggregate basis, we expect the heavy commercial segment to decline by 12-15%, and light commercial vehicles to post a flat growth,” he said.
The improvement will also partly be driven by freight availability that will grow with better factory output and easing of credit by the financiers.
An uptick in two-wheeler demand in April was led by market leader Hero Honda Motors Ltd. The Delhi manufacturer sold 363,357 units, 28.6% more than what it sold in the same month last year. It also saw a jump of 13 percentage points in its market share to 51.83%.
Sales of cars and passenger vehicles were led by Maruti Suzuki India Ltd, which sells one in two cars bought in the country. The Indian unit of Japanese car maker Suzuki Motor Corp. sold 64,850 units in April, an improvement of 9% from a year ago. It was helped by the volumes raked in with new models such as the A-star, which sold some 10,000 units a month.
Mahantesh Sabarad, an analyst with Centrum Broking Ltd, cautioned that the returning momentum in vehicle sales may not last beyond June over uncertainty in formation of a new government at the Centre. Results for the general election are scheduled on 16 May.