Mumbai: Domestic car makers reported muted volumes for January as high interest rates dissuaded buyers from making purchases, although car makers and analysts believe the worst is over with auto loans becoming cheaper following the Reserve Bank of India (RBI) reducing its key lending rate.
Car market leader Maruti Suzuki India Ltd sold a total of 114,205 units in January 2013. This included 103,026 units in the domestic market, an expansion of 2% over the last year. Domestic sales at Hyundai Motor India Ltd, the country’s second largest car manufacturer, rose marginally by 1.2% to 34,302 units from a year ago.
Tata Motors Ltd, which was pipped by Mahindra and Mahindra Ltd as the third largest passenger vehicle maker, had the steepest decline in January. The company’s passenger vehicles sales dropped 56% to 15,209 units.
Its shares briefly slumped as much as 10% in afternoon trade, before recovering to close 1.68% lower at Rs.293 apiece on the National Stock Exchange (NSE).
Utility vehicle market leader, Mahindra and Mahindra, meanwhile, bucked the sales trend and reported a 16% expansion in domestic volumes to 47,841 units against last year. The company’s passenger vehicles segment (which includes utility vehicles and Verito) registered a 33% growth to 26,555 units.
Sales at the local arm of Toyota Motor Corp. declined 23% to 13,329 units.
Renault India Pvt. Ltd’s sales rose fourfold to 4,914 units driven by its Duster sports utility vehicle (SUV), which accounted for 3,554 units.
On the back of the strong volume growth led by Mahindra, the passenger vehicle segment is expected to end the year with a 7% growth.
Sales at the India unit of Ford Motor Co. contracted 33% to 6,062 units.
The BSE Auto Index fell 0.98% to 10,885.84 points on Friday while the BSE benchmark Sensex fell 0.57% to close at 19,781.19 points.
Analysts and car makers are positive about the prospects for the industry in the coming months.
The RBI reduced its key rate on 29 January, prompting banks to reduce interest charges on auto loans—a move that’s expected to spur buying and translate into better volumes in the coming months.
“Volumes from here on will start improving,” said Mahantesh Sabarad, analyst at Fortune Equity Brokers Pvt. Ltd. He added, though, that the increase in fuel prices may discourage sales to some extent. The government de-regulated diesel prices on 17 January, allowing petroleum companies to increase or decrease prices.
Among two-wheeler companies, Honda Motorcycle and Scooter India Pvt Ltd saw two-wheeler sales rise 22% to 230,304 units over the last year, while sales at Suzuki Motorcycle India Pvt. Ltd rose 14% to 39,982 units.
Sales at India Yamaha Motor Pvt. Ltd increased to 29,785 units from 26,300 units last year in the domestic markets.