Mumbai: A decline in two-wheeler sales and slower growth in the passenger car segment dragged down vehicle sales by 7.67% in January in India, Asia’s third largest automotive market by vehicle sales, as higher interest rates and banks and non-banking finance firms’ lack of enthusiasm for extending loans led consumers to defer their purchases.
Fast lane: The Hyundai facility at Sriperumbudur. The company is riding on robust sales of the i10
Overall, vehicle makers registered sales of 829,569 units in January, according to figures released by the Society of Indian Automobile Manufacturers (Siam), an industry body, on Friday. Sales of passenger vehicles rose 8.5% to 147,186 units, compared with 135,654 vehicles sold in January 2007.
Maruti Suzuki India Ltd, which sells half the cars in the country, and Tata Motors Ltd saw sales decline even as Hyundai Motor India Ltd and Mahindra and Mahindra Ltd (M&M) improved their sales figures during the month.
Maruti reported a marginal slide of 1.9% as it sold 63,459 units last month. The SX4 and Swift models helped its numbers even as sales of the Maruti 800 dropped more than 20% over January 2007. Meanwhile, sales at Tata Motors weakened to 22,115 vehicles, down 3% from the year-ago period.
Hyundai’s sales rose by 39% to more than 24,300 units, thanks to robust sales of its i10 model. Similarly, M&M saw sales go up 17.7% to 12,663. However, this figure includes 2,301 units of the Logan, which is sold through its joint venture company, Mahindra Renault Pvt. Ltd.
“We have a fairly healthy pipeline of products in 2008 and 2009, and this will see us gain ground,” Rajiv Dube, president (passenger cars), Tata Motors, had said last week when the company announced its earnings for the December quarter. “New products will bail manufacturers out,” he had said.
Not surprisingly, two-wheelers continued to slide for the 12th straight month in January. This segment is the hardest hit as sales fell 11% to tally at 605,455, as banks have become more selective in giving loans to buyers, especially in the entry-level segment.
Sales at Hero Honda Motors Ltd, the largest seller of bikes in India, dipped 1.64% after the company sold more than 290,000 vehicles in January. However, both Bajaj Auto Ltd and TVS Motor Co. Ltd saw double-digit declines in their sales volumes during the month. Bajaj Auto’s sales were down 22% at 135,804 units.
TVS Motor posted a 29.6% decline in sales at 80,277 units, largely because of a 56.5% dip in sales of its motorcycles. TVS, which also sells scooters and mopeds, was banking on the sale of its 125cc Flame to prop up its sales in January, said a company spokesperson.
For the moment though, TVS has not been allowed to take additional bookings of the Flame model as the company is embroiled in litigation over intellectual property rights with Bajaj Auto. “Our inability to sell the Flame and the restricted availability of finance in the entry-level segment has impacted our sales in January,” said a TVS spokesperson.
Some 60% of all bikes and 85% of all cars are bought on finance. The interest charged to customer to finance cars has gone up from 9.5% in the last 18 months to 12.5% now.