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Auto sales growth slowing as excise rate hike takes effect

Auto sales growth slowing as excise rate hike takes effect
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First Published: Thu, Apr 01 2010. 11 01 PM IST

Photo: Hemant Mishra; Graphic: Yogesh Kumar/Mint
Photo: Hemant Mishra; Graphic: Yogesh Kumar/Mint
Updated: Thu, Apr 01 2010. 11 01 PM IST
New Delhi: Sales of cars, trucks and two-wheelers remained strong in March, but the numbers released on Thursday showed clear signs that growth in the sector was slowing as price increases take effect.
One bright spot was the strong demand for the new small car models launched in the previous three months.
Auto sales in India rose at a brisk pace the past four months as the spectre of rising prices due to increasing commodity costs, stricter emission norms and higher loan rates led consumers to advance buying decisions.
March has traditionally been a strong month for auto sales as buyers prefer to make purchases before the end of the fiscal year. But many buyers had advanced their car purchases to February in anticipation of an increase in excise rates in the Union Budget at the end of the month.
The industry now looks set to go through slow growth for a few months at least.
“The threat of rising prices seems to have worked for each of the last three months,” said Shashank Srivastava, chief general manager, marketing, at Maruti Suzuki India Ltd, the country’s largest car maker. “The first quarter of this (fiscal) year will be tough.”
Photo: Hemant Mishra; Graphic: Yogesh Kumar/Mint
In the next few days, car makers are expected to announce price increases of 2-5% as tighter emission norms and rising commodity prices push up costs. On Thursday, Toyota Kirloskar Motor Pvt. Ltd raised prices by Rs5,000-23,000.
Maruti shipped 79,530 cars to dealers in March, a jump of 7.7% over the same period last year, but fewer than the 84,765 units it sent to dealers in February.
Car makers report dispatches to dealers and not retail sales.
Hyundai Motor India Ltd, the country’s second largest car maker, sold 31,501 units against 24,754 units a year earlier, a growth of 21.4%. In February, it had sold 31,001 cars.
Tata Motors Ltd sold 29,868 units in March, a 17% rise over the a year ago. But it had sold 31,933 cars in February.
Maruti crossed 1 million units in 2009-10, while Hyundai, which has developed India as a small car export base, crossed the 600,000 mark.
Aggressively priced small cars launched by Indian subsidiaries of Ford Motor Co. and General Motors Corp. received an enthusiastic reception from the market.
Ford said it had received over 10,000 orders for the Figo while the Beat became General Motors’ top selling car, displacing the Spark.
Sales at Ford more than tripled to 9,478 units in March. The company aims to clear the waitlist for the car by the end of April, said Nigel Wark, executive director for marketing, sales and service at Ford India. Most of new orders have been for the higher-end petrol and diesel versions, he said.
A 164-strong dealer network and high levels of localization (85%), contributed to the car making a dent in the market.
General Motors’ sales more than doubled to 11,330 units in March.
Unlike Ford and General Motors, Volkswagen’s Indian operations have so far found it hard to gain traction. The Polo, launched on 25 February, has so far received 5,000 orders, said Neeraj Garg, director at Volkswagen Group Sales India Pvt. Ltd.
The Polo is priced at Rs4.34 lakh and has a 50% localization. Garg said it would take the company two to three months to complete deliveries for the orders received so far.
The severe competition in the small car segment has begun to show up in Maruti’s numbers. Sales of its fast-selling models such as the WagonR, Swift and Ritz dropped 1.2% to 54,763 units in March.
Honda Siel Cars India Ltd. saw year-on-year sales in March fall 24% to 5,928 units.
Truck sales saw their highest ever numbers at 43,285 units—a growth of 49% as operators beefed up their fleets in anticipation of increased freight movement and demand from the infrastructure sector as the economy rebounds.
Ashok Leyland did not release its numbers.
Hero Honda Motors Ltd, the country’s largest two-wheeler maker, sold 414,638 units in March, a jump of 17% over a year ago. Sales at TVS Motor Co. Ltd rose 25% to 126,669 units in March. Smaller players Suzuki Motorcycle India and India Yamaha Motor sold 21,752 and 27,460 units, respectively.
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First Published: Thu, Apr 01 2010. 11 01 PM IST
More Topics: Auto | Motors | Sales | Tata | Cars |