Auto sales rise a healthy 18% in August

Auto sales rise a healthy 18% in August

New Delhi: Car sales in India, Asia’s third largest automobile market, accelerated 18% in August over a year ago as new brands sold more and dealers stockpiled units in anticipation for the festival season. The growth also outpaced the 11.2% rise in July.

Overall vehicle sales, however, fell 1.68% as five-year high bank lending rates crimped sales of commercial vehicles and motorcycles.

Car makers, led by Maruti Udyog Ltd, which alone sells half the cars sold in India, sold 98,893 cars in the month compared with 83,864 units a year ago, according to data provided by the Society of Indian Automobile Manufacturers, an industry group.

We had “lots of special schemes for vendors, employees," which helped us increase sales, said Maruti managing director Jagdish Khattar. “These schemes are ending and let’s see what happens then."

Maruti reported 24.8% rise in August sales, up to 52,055.

“The base effect will start catching up with Maruti," predicts S. Ramnath, vice-president at SSKI Securities Ltd. Ba-se effect refers to the difficu-lty of growth happening on top of heavy sales the previous year.

Other car makers who reported double digit growth include General Motors India Pvt. Ltd, which saw its latest introduction, the Chevrolet Spark, boost sales over fourfold to 4,270, and Ford India Pvt. Ltd. Eight of the 13 car makers in India posted gains in August.

“The growth (in the car market) is in line with expectations," said Vaishal Jajoo, analyst with Angel Broking. “The outflow from companies to dealers increased" ahead of the festival season.

The pan-Indian festivals of Diwali and Dussehra fall in the third quarter of the fiscal year, as does the auspicious period for weddings. Buying new veh-icles is common in this period and vehicle sales surge the highest during this season. So-me seven in 1,000 people own a car in India, a relatively low per-capita ownership level.


Two-wheeler sales, meanwhile, continued to decline for the fifth straight month as buyers postponed or avoided purchases because lending rates have hampered their ability to take loans. Scooter and motorcycle sales fell 5.41% to 543,504 units in August compared with 574,570 units a year ago. More than 70% of two-wheelers are financed. Manufacturers such as TVS Motor Co. Ltd and Bajaj Auto Ltd, India’s second largest two-wheeler maker, are introducing new vehicles to boost sales in the second quarter and recover from the slump. Hero Honda Motors Ltd, India’s largest bike maker, too is planning a launch in the coming months to boost sales.

Still, analysts and companies see a reversal in the second half as new vehicles stimulate sales and new financiers enter the market. “The one positive is that interest rates have started showing signs of easing as new aggressive players such as Reliance Money and GE Capital enter the market." said SSKI’s Ramnath.

Commercial vehicles

Commercial vehicle sales in August grew 3.24% to 36,409 units, driven by light trucks and light bus sales.

Three-wheeler sales continued to decline. Sales dipped to 33,588 vehicles in August compared with 34,691 units a year ago as smaller four-wheeled cargo vehicles, such as the Tata Ace, made by Tata Motors Ltd, ate into their market.

Kartik Goyal of Bloomberg contributed to this story.