Market leader Maruti Suzuki India Ltd reported a 5.4% rise in vehicle sales for the month of January. Its counterpart in the two-wheeler space, Hero Honda Motors Ltd, witnessed a 5.8% growth in sales. But it would be facile to jump to the conclusion that the auto industry has had a great start to 2009.
These two companies have lately outperformed their peers by a big margin and industry growth is likely to be much lower.
Already, Bajaj Auto Ltd has reported a 34% drop in sales and Tata Motors Ltd has said that sales of its passenger vehicles fell 9% year-on-year. Hyundai Motor India Ltd also witnessed a decline in sales, and so did Mahindra and Mahindra Ltd in its utility vehicles.
While there has been some improvement in sales—indicated by the improvement in month-on-month sales—owing to the excise cuts in December, the gloom in the Indian economy continues to hamper sales of consumer vehicles.
Maruti and Hero Honda have gained at the expense of their competitors, mainly owing to their wider marketing reach and their focus on the rural segment, which is less affected by the slowdown. But these firms have also been rewarded with relatively high valuations, and the sales figures for January only confirm what the markets had already assumed about their outperformance.
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