Motown has a smooth start to the new year

Rise 7% in January; increase despite price and excise duty rises

 

Domestic car sales in January is estimated to have risen seven over a year ago, despite a price increase due to higher input costs and a four-six per cent rise in excise duty. This signals improving consumer sentiment, even as lower fuel prices lead to a drop in ownership costs, and the confidence in India’s macroeconomic potential returns.

The rates of interest on auto loans, expected to come down as the Reserve Bank of India further lowers its key policy rate over the next few months, are likely to give an additional boost to demand for cars.

Launch of new models and higher demand for petrol vehicles remained key drivers for car companies during the month, with market leader Maruti Suzuki reporting a nine per cent jump in domestic sales to 105,559 units. Hyundai, the second-largest player, saw a four per cent sales jump to 34,780 units. Honda’s sales volumes grew 17 per cent to 15,714 units, while Toyota Kirloskar’s rose 16 per cent to 12,650 units.

Rakesh Srivastava, senior vice-president (sales & marketing), Hyundai Motor India, said: “Growth came on the momentum built by products like the new Elite i20, Grand and Eon, while facing stiff challenges of increasing ownership cost on account of an increase in excise duties. The need of the hour is a reduction in interest rates and rationalisation of taxes to increase the inflow of first-time buyers.”

Jnaneswar Sen, senior vice-president (marketing & sales), Honda Cars India, said: “We registered our highest monthly domestic sales of this financial year. This was aided by strong sales momentum for all models.”

In fact, Tata Motors, whose sales have been declining sharply for the past two years, in January saw its highest volume growth, of 19 per cent to 13,047 units, on the back of new models, the Zest compact sedan and the Bolt hatchback.

Nearly all top players — Maruti Suzuki, Hyundai, Honda, Toyota Kirloskar, Tata Motors, Mahindra & Mahindra (M&M) and Ford — saw their volumes rising on a sequential basis over December, too, indicating higher prices were mostly being absorbed by the market. “A major reason why January sales are up is because many buyers delay purchases in November and December to the new year, to improve the resale value of their cars,” a sector analyst said.

Among the major players, utility vehicle specialist Mahindra & Mahindra, General Motors (GM) and Ford were the only companies whose sales volumes dropped in January. M&M saw a five per cent decline to 18,804 units, while Ford’s sales fell one per cent to 6,647 units, and GM’s 16 per cent to 4,667 units. M&M’s lower sales were attributed to a lack of launches last year — the company last year launched only a facelift of the Scorpio SUV.

Pravin Shah, chief executive (automotive division), M&M, said: “The first month of 2015 has not been encouraging, as the effect of a withdrawal of excise duty subsidy is clearly evident. The segmented recovery that we were witnessing for the past few months has been affected by the excise duty change. We do hope that the coming Union Budget will have some positive news for the automobile sector. At Mahindra, we are happy with the performance of our exports, as well as our trucks & bus division”.

STABLE DRIVE | Create infographics