Mumbai: Vehicle makers in India, Asia's third largest market for cars, sold more units in May compared with a year ago, although their gains came against weak sales in 2007, stoking concern that demand will continue to be tepid in 2008-09.
Indian consumers had deferred purchases last year in May because the latter half of the month coincided with inauspicious period in the Hindu lunar calendar which occurs once in four years and during which most people avoid big-ticket purchases such as those of cars and motorcycles.
Two-wheeler sales that ragged down demand for well over a year, spiked up in May. TVS Motor Co. Ltd, the country’s third largest two-wheeler maker, sold 4% more two-wheelers in May over a year ago at 112,770 units in India and abroad, thanks to the strong performance of its Apache RTR motorcycle.
Meanwhile, market leader Hero Honda Motors Ltd and No. 2 bike maker Bajaj Auto Ltd said on Sunday that sales rose 9.5% and 7%, respectively. The bulk of all sales for these players is in India. Exports of two-wheelers out of India accounted for 10% of the total two-wheeler sales in the year ended March.
“The growth is in line with expectations. We believe FY09 is going to be better than last year, growing from a lower base while incomes are rising and vehicle makers are launching new products (to revive sales),” said Piyush Parag, automotive analyst at Religare Securities Ltd.
Car sales rose even though the high interest rates continued unabated and the prospect of a hike in fuel prices loomed large. Consumers mostly bought new car models, somewhat helped along by lower income taxes in the current year that may have left them with extra change in their bank accounts.
Maruti Suzuki India Ltd, which makes half the cars sold in the country, said sales rose almost 15% in May from a year ago to 64,143 vehicles. Interestingly, Maruti despatched its new Maruti 800 Duo, its LPG (liquefied petroleum gas) version, due this month to dealers, thereby showing a 25% growth in sales of the 800 model for May over a year ago period.
Hyundai Motor Co.’s local unit posted a 47% increase in sales to 24,510 vehicles riding on the brisk sales of its Santro and i10 small car. Sales at General Motors India Ltd increased 6.5% in May over a year ago to 5,789 units, with its Spark, Aveo and Tavera models leading the sales.
However, industry executives and analysts said that external factors such as higher interest rates and limited credit availability would continue to impact the sales of vehicles in India.
“The fear of impending increase in fuel prices, rising interest rates and threat of the global recessionary trend are affecting the growth of the sector,” said P. Balendran, vice- president, General Motors India.