Auto sales' rough ride continues

The sales numbers for May declared by some of the automobile companies today generated hope that the economy may have bottomed after a series of interest rate cuts and other stimulus steps, but others quickly poured the proverbial cold water on the optimism.

Maruti Suzuki, which accounts for at least one of every two cars sold in the country, reported a healthy 10.4 per cent sales growth in domestic sales in May over the same month last year. Hero Honda, the world’s biggest in two-wheelers said its sales grew 22.5 per cent, as it rode on strong demand in semi-urban and rural markets and product updates. Honda Siel, a force in mid-size cars, reported 3.3 per cent growth.

However, Hyundai, a significant rival to Maruti, especially in hatchbacks, suffered a 4.11 per cent drop in sales. Tata Motors reported a 20 per cent decline in domestic passenger car sales. In the commercial vehicles segment, its sales in the domestic market were down 2.86 per cent.

The export markets, especially Europe, where countries have introduced discount incentives to trade in older cars, provided greater respectability to these numbers. Maruti’s total sales grew 15.8 per cent and Hyundai’s actually rose 8 per cent.

“The demand for our cars grew in the European Union market,” said Arvind Saxena, senior vice-president (marketing & sales), with Hyundai. He expressed the hope that the forthcoming budget would offer export incentives.

For Maruti, most of the growth came from fuel-efficient, compact cars, ranging from its best-selling Alto at the lower end, to the new Ritz hatchback and Swift at the upper end. “I think the factors that are coming in are that in India the economy is still growing by almost 6 per cent... which is not a bad growth figure. Interest rates are now much more friendly than what they were a few months ago,” Chairman R C Bhargava told a news channel. State-owned banks, he said, had resumed financing vehicle purchases.

Mahindra & Mahindra, India's largest utility vehicles and tractor maker, said its domestic sales fell 14 per cent in May, partly due to the shutdown of a plant because of a labour dispute. However, the company's domestic tractor sales jumped 46 per cent. "In spite of the recent shutdown at our Nashik plant, we clocked impressive sales… reflecting a positive and healthy demand for our products," M&M Chief of Operations Rajesh Jejurikar said in a statement.