Mumbai: Even as sales of cars and bikes continue to shrink from a year ago, fortunes of at least the market leaders are looking up for the first time in four months, going by January volume sales at Maruti Suzuki India Ltd and Hero Honda Motors Ltd.
Maruti Suzuki reported a 5.6% growth in the month gone by, by selling 67,005 cars in the domestic market, while Hero Honda sold 315,458 two-wheelers, a growth of 5.8% from January last year. The comparable growth rates between January last year and 2007 were 2% and 0.16%, respectively.
Also See Spurt in January Sales (Graphic)
Though it is early to say if this marks a revival in automobile sales, analysts and industry executives saw positives in the spurt in January sales. It was driven primarily by a pent-up demand from December and liquidating of inventory by dealers, they said.
“We can see the tide turning,” said Mayank Pareek, executive officer (marketing and sales) at Maruti Suzuki. “With growth enablers like lower interest rates, lower inflation and finance availability coming back into play, one can see a reversal in trends.”
Automobile sales, according to data from business lobby Society of Indian Automobile Manufacturers, had shrunk in all but one of the four months to December. The overall industry data for January is scheduled to be released next week.
With total unit sales of 71,779, including exports, Maruti Suzuki surpassed its previous all-time high of 71,772 units in March 2007. Auto makers in India tote up monthly sales by counting the number of units shipped to dealers, not necessarily those bought by consumers.
An analyst said the jump in January sales came about as dealers could sell more in December. “Owing to high level of inventory at their end since the last three months, dealers were unable to buy fresh stocks from the manufacturers,” Mitul Shah, an auto analyst with First Global India Research, said. “They were, however, able to liquidate the stock in December as a result of the excise duty benefits, and discounts and schemes offered by the auto makers to push sales.”
Shah also attributed the growth to the pent-up demand from December for new year models. Auto demand in India drops sharply in the last month of the year because a vehicle’s resale value is assessed by the year of manufacture, valuing a December-made car or bike significantly less in the after-sales market a few years after purchase.
Jinesh Gandhi, an auto analyst at Motilal Oswal Securities Ltd, put sales better than expectations to “improving market sentiments”.
For Maruti, the growth was led by a 124% jump in demand for its premium sedans, including the SX4, Esteem and Dzire models.
Hero Honda attributed its good showing to new models and excise duty benefits passed on to customers. “Introduction of new models like Passion-Pro, Splendor NXG and CD Deluxe with power start, helped in propelling the sales,” Anil Dua, vice-president (sales and marketing) at the bike maker told Mint.
Apart from manufacturers such as Yamaha Motor India Pvt. Ltd, which rode high on sales owing to the lower base last year and new product launches, most of the other auto makers reported a decline in their year-on-year sales.
Domestic sales of two- and three-wheelers at Bajaj Auto Ltd declined 47.3% to 78,321 units. “Bajaj’s decline is in line with the decline it has been witnessing since the last three-six months, primarily because of company’s smaller presence in the entry-level segment. However, we do expect it to get arrested with the new launches in the two- and three-wheeler segment,” said Shah of First Global.
Tata Motors Ltd, India’s third largest car maker by sales, also saw its domestic car sales erode by 9% to 18,331 units in January, from the year-ago month.
The Sumo and Safari utility vehicle models accounted for sales of 2,925 units, 40% lower than January last year, owing to disruption of supplies from a key vendor, the company said in a statement.
Utility vehicle maker Mahindra and Mahindra Ltd sold 17% less vehicles in the domestic market, registering 17,320 units, including 1,788 units of its newly launched multi-purpose vehicle, Xylo.
Tata Motors’ sales of commercial vehicles saw a drop of 43% in the domestic market to 17,373 units.
“The two-wheeler and passenger car segment are relatively less vulnerable to the macroeconomic factors than the commercial vehicles, hence while the former may see a flat to low growth, the later would continue to decline. Other commercial vehicle makers have yet to report their January sales numbers,” said Shah of First Global.
Yamaha Motor India registered a growth of 192% selling 18,329 units in January, while sales at Hyundai Motor India Ltd shrunk 13% to 21,016 units. TVS Motor Co. Ltd reported a decline of 0.6% in its domestic two-wheeler sales to 79,029 units. Sales at General Motors India Pvt. Ltd and Honda Siel Cars India Ltd also dropped 28% to 3,937 units and 25% to 5,773 units, respectively.