A slow start for auto firms in ’08

A slow start for auto firms in ’08
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First Published: Fri, Feb 01 2008. 11 48 PM IST
Updated: Fri, Feb 01 2008. 11 48 PM IST
Mumbai: Motorcycle sales continued to fall, the country’s largest car maker increased sales at the slowest pace thus far in 2007-08, and car makers that launched new models saw sales rise significantly in January, even as overall sales in Asia’s third largest auto market slipped almost 8.9%, according to preliminary data from large auto companies.
Sales at Maruti Suzuki India Ltd, which sells one out of every two cars sold in the country, grew barely 2%. Last year, its continued growth helped prop up auto sales in a slowing market. Two-wheeler sales, meanwhile, continued to slide with Hero Honda Motors Ltd, which sells the most bikes in the country, failing to sell significantly more than it did last January, and its two closest rivals showing a double-digit fall in sales.
Industry analysts and executives say consumers are unlikely to suddenly start buying more cars and two-wheelers than they have in the past few months, not unless borrowing costs, at a five-year high now, fall. Almost 60% of motorcycles and 85% of cars sold in India are financed. It can cost as much as Rs1,228 more per month to buy a Rs4 lakh car on a five-year loan today than a year ago. “The key thing is for interest rates to come down. We have gone from one end of the pendulum to the other. Some balancing has to be found,” Tata Motors Ltd managing director Ravi Kant said on Thursday while releasing the company’s December quarter results. Tata Motors, India’s largest seller of vehicles by revenue, saw sales fall 12% in January.
Maruti Suzuki sold 63,459 vehicles in January, but mostly on account of newer models such as the SX4 sedan and the Swift hatchback. Meanwhile, rival Hyundai Motor Co.’s local unit reported its highest growth ever at 39.1% in January with 24,301 units—led by its i10 model launched in October. It has since sold more than 25,000 units of the i10.
New launches have particularly helped General Motors India Ltd and Skoda Auto India Pvt. Ltd make major gains. GM’s sales rose 46.1% to 5,517 units, including 96 of its new sports utility vehicle, Captiva. Skoda sold 680 units of its new Fabia, taking its sales up 47.9% to 1,526 units last month.
“Vehicle makers have launched new passenger cars, which will sustain the growth in this segment,’’ said Piyush Parag, analyst with Religare Securities Ltd. “In two-wheelers, apart from lowering interest rates, new products will lead to volume growth.”
The gloom in the two-wheeler industry, which has seen sales slide for 12 months now, deepened in January.
Bajaj Auto Ltd, India’s second largest maker of two-wheelers, and its immediate smaller rival TVS Motor Co. Ltd, have seen sales fall for as many as 11 straight months. Even sales of market leader Hero Honda Motors, at 298,050 two-wheelers, started to flag, with only 496 more units sold last month than in January 2007. This number includes exports, and Hero Honda Motors does not give a monthly break-up of its domestic and export sales, making it hard to guess how domestic sales fared. Bajaj’s two- and three-wheelers sales fell to 148,660 units in January, down 21.6%. TVS saw a 29.6% drop in domestic sales to 80,277 two-wheelers in January compared with 114,098 units in the same period a year ago.
Ravi Krishnan in New Delhi contributed to this story.
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First Published: Fri, Feb 01 2008. 11 48 PM IST