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Car sales shift gears
Posted on 2nd July 2014
In a revival sign for the country’s troubled automobile industry, nine leading carmakers’ combined sales in June was 18 per cent higher than those in the same month last year.

A new and stable government at the Centre seemed to have bolstered consumer sentiment, as buyers returned to showrooms — the nine passenger vehicle manufacturers that released their numbers on Tuesday sold a combined 204,287 units in the month, compared with 173,624 in June 2013.

The spurt in vehicle sales would have been even higher — more than 21 per cent on a year-on-year basis — if the number of units sold by Tata Motors, which has struggled with an ageing vehicle portfolio for most of the past two financial years, were excluded from the overall data. This was a second straight month in which top automobile companies saw positive sales growth. In May, vehicle sales had risen 2.7 per cent over the year-ago period.

Maruti Suzuki, the country’s biggest carmaker, led the sales tally in the domestic market in June, given a strong turnaround in demand across vehicle categories. The company reported a whopping 31 per cent increase in sales to 100,964 units from 77,002 in June 2013.

A senior Maruti Suzuki executive said: “There were many reasons for an increase in sales. Since the excise concessions announced in the interim budget were to last till June, there was a rush to buy early. Also, we saw consumers holding their purchase plans in March-April, probably because of an uncertainty over the elections. With the formation of a stable government at the Centre, this latent demand was converted into big sales in the past few weeks.”

While sales of Maruti’s small cars Alto and WagonR rose 52.1 per cent to 47,618 units, demand for premium models also improved. Sales of the Swift, Ritz and Celerio increased 6.2 per cent to 22,293 units, of sedan DZire rose 27.4 per cent to 15,990, of utility vehicles Ertiga and Grand Vitara 0.1 per cent to 5,003 units and of vans Eeco and Omni 42.5 per cent to 9,738 units.

PricewaterhouseCoopers Partner Abdul Majeed explained: “The pent-up demand of the past two years is now translating into sales. Consumers are returning to showrooms. Automobile companies, too, are trying to clear their inventory by offering good discounts. A recovery for the industry has set in. With excise concessions, sales of passenger vehicles should grow 10 per cent this financial year.” The excise duty concessions — a cut of three percentage points to six per cent — were last week extended till December 31.

Meanwhile, new launches helped boost numbers for Hyundai, Honda Cars India and Toyota Kirloskar. Hyundai’s domestic sales rose 9.5 per cent to 33,514 units. Its senior vice-president (sales & marketing), Rakesh Srivastava, said: “Hyundai’s sales volume has grown 9.5 per cent on the back of the phenomenal success of the Xcent, Grand and Santa Fe. With the extension of excise duty benefits, we hope to maintain the growth momentum, strengthen our product portfolio and improve channel efficiencies.”

For Honda Cars India, the newly-launched Honda City (7,723 units) and the Amaze helped grow sales by 75 per cent. The sedans contributed as much as 91 per cent to Honda’s overall passenger vehicle sales in the domestic market.

For Toyota, the newly-launched Corolla Altis and Etios Cross accounted for 1,548 of the 12,010 units sold last month. N Raja, the company’s director & senior vice-president (sales & marketing), said: “The Corolla Altis and Etios Cross have been accepted well by the customers. We received more than 5,400 booking orders for the Etios Cross and more than 3,000 for the Corolla Altis. The waiting period is three months for the former and two months for the latter. We are working on reducing the wait period.”

Home-grown Tata Motors and Mahindra & Mahindra (M&M), with no new vehicle launches, continued to see sluggish demand. While Tata Motors’ sales fell 33 per cent to 7,911 units, M&M’s was down 2.6 per cent to 16,780 units. Pravin Shah, chief executive, (automotive division), M&M, said: “The government’s recent announcement of an extension in excise duty concessions will provide a fillip as we go into the festive season.”

Ford India’s executive director for marketing, sales and service, Vinay Piparsania, agreed: “The excise decision is a welcome move and will certainly lift consumer sentiment before the festive season. It reflects the government’s recognition of the manufacturing sector’s importance and contribution to the overall economic growth.”

However, there were some who advised caution. Skoda India Managing Director Sudhir Rao, for example, said: “There are concerns about the possibility of a poor monsoon and its impact on car sales, especially from July. But the excise benefit extension should give a boost in the festival season.”

Related Companies: Maruti Suzuki India Limited   Hyundai Motor India Ltd.   Tata Motors   Ford India Limited

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