Mumbai: Maintaining an upward trend since January, India’s auto makers sold 929,596 vehicles in May, a 9% increase over the same month last year, an industry body said.
“Easing of liquidity, a government stimulus package, softening of interest rates and the two-wheeler industry has driven the sales,” said an analyst from brokerage First Global Securities Ltd.
Two-wheelers continued to keep auto sales growing by selling 727,937 units, or 12.5% higher than in the same month last year, according to data released by the Society of Indian Automobile Manufacturers Association (Siam).
Revving up: Hero Honda Motors, which controls nearly half the two-wheeler market, sold 382,678 units locally last month.
Gurgaon-based Hero Honda Motors Ltd, which has 54.51% of the market, led the way, selling 382,678 motorcycles and scooters in the domestic market, an increase of 22% .
Commercial vehicle sales fell for the eighth month, this time to 30,800 units from 36,141 units, or 14.7% less, from a year ago. Passenger vehicles, which include cars, utility and multi-purpose vehicles, fell 0.8%, largely because of a 29% dip in sales of utility vehicles, which constitute 14.5% of the segment.
The drop in the utility vehicle sales was largely because of lower sales at Mahindra and Mahindra Ltd (M&M), which sells at least 40% of these automobiles in India. Following a 14-day strike at its factory in Nashik, Maharashtra, which makes the Bolero, Scorpio and Xylo, M&M’s output to dealers fell 14% to 16,581 units over last year.
Passenger car sales, which grew marginally by 2.47%, or 113,490 units, were driven primarily by market leader Maruti Suzuki India Ltd, which sold 70,785 units in the domestic market against 64,143 last year, an increase of 15%.
S. Ramnath, vice-president (research) at IDFC-SSKI Securities Ltd, said sales would continue to be strong. “July particularly will be very strong because of Ganesh Chaturthi (a Hindu festival) in August this year. Manufacturers will hence push the stock to dealers aggressively,” he said, adding that the usual discounts from the auto firms and a lower base from the previous year would also help sales.
The First Global analyst, who spoke on condition of anonymity, pointed out that the impending monsoon, which is expected to hit the west coast later this month, would dampen sales in the next two months. “Typically, the months of June and July are slack for the auto industry because of the rainy season. The revival is seen only in August with the festive season.”
Sales of commercial vehicles will likely continue to be lean, but a full-year recovery will be seen in the second half of 2009, largely because of the low base of last year, he added.
Auto exports rose 5% to 119,817 units, which included 80,138 two-wheelers, a growth of 3.73%, and 29,763 passenger vehicles. With 9,087 units sold in May, or twice the number last year, Maruti Suzuki contributed at least one-third to passenger vehicle exports.
With India becoming a hub for small cars and demand for fuel-efficient cars growing in developed markets, exports of passenger cars could continue to drive growth in the coming year, said Chennai-based Abdul Majeed, auto analyst at audit and consultancy firm PricewaterhouseCoopers.
“We will see a double digit growth in passenger car exports from India once the global economy recovers and demand picks up,” he added.