Mumbai: Vehicle sales in India, which grew in the first three months of 2009, continued the momentum in April, traditionally a lean month for sales, data released by leading auto makers on Friday showed, taking some analysts by surprise.
Auto sales in the country contracted in the three months to December in line with a slowdown in the economy as a global financial crisis spread and risk-averse banks pulled back on lending. Commercial vehicles, mainly trucks and buses, where financing accounts for two of three units sold, were the worst hit, with sales halving in some months.
While MarutiSuzuki India Ltd, which sells one in two cars bought in the country, sold 64,857 cars in the domestic market in April, a growth of 9% over last year, Hyundai Motor India Ltd, the second largest car maker, reported sales of 22,247 units, an expansion of 3.5%.
Both firms saw a significant improvement in their exports mainly on back of new models introduced primarily for these markets. Exports at Hyundai, led by its compact car i20, grew nearly one-fifth with 22,124 units. The A-star car did this for Maruti, which exported a total 6,891 cars, a growth of 146%.
Both Maruti and Hyundai saw a cumulative (domestic sales plus exports) double-digit growth of 15% and 10.9%, respectively, in April this year over April 2008.
The growth in sales in April for most auto makers, however, still lagged double-digit growth rates in the previous year, leading analysts to say that it was too early to call if a recovery was firmly under way.
In April 2008, Maruti and Hyundai in India reported sales growth of 23% and 47%, respectively, over the year-ago month.
According to data from industry body, Society of Indian Automobile Manufacturers, companies sold a total of 1.3 million passenger vehicles, which includes cars, utility and multi utility vehicles in the year to March, a growth of 21.21% over 2007.
They also sold 6.1 million motorcycles and scooters, a growth of 8%.
Among the two-wheeler makers, HeroHonda Motors Ltd, the country’s top two-wheeler manufacturer by volumes, sold 370,575 units in April, a growth of 29.5% compared to the previous year.
Smaller rival TVS Motor Co. Ltd registered a marginal increase of 3% in its cumulative sales with 113,119 units.
Sales at Honda Siel Cars India Ltd, the local unit of Honda Motor Co. of Japan, went up 7.5% to 3,656 units. Growth was led by the company’s premium sedan, Honda City, of which it sold 2,801 units.
Sales of utility vehicles at Mahindra and Mahindra Ltd also expanded 15% to 23,004 units in April.
Auto sales in April, which is the first month of the current fiscal year, are traditionally lean as it follows the month with the highest demand or March, which is the last month for businesses to be able to avail of depreciation benefits on a vehicle asset such as a car or truck for that previous accounting year.
The sales numbers at Hero Honda, then, took one analyst by surprise. “I am positively surprised by their sales numbers. This is despite the fact that they haven’t had any new launches since 2007, the year when they launched the Hunk,” said Mahantesh Sabarad, senior analyst with Centrum Broking Ltd.
Other industry watchers too were surprised, though guarded in their optimism until the industrywide numbers are out.
The demand in April, said Neeraj Bandhu, director (India) at CSM Worldwide, a market strategy and forecasting firm, could be the function of softening interest rates and improving customer sentiment as inflation continues to fall. “We had expected the actual turnaround to take place only in the third quarter of the current calendar year when the festive season begins,” he said.
Bandhu also attributed the growth to the pent up demand for models such as the Swift DZire and Honda’s new City, which had a long waiting period that has now been addressed by the companies.