Commercial vehicles growth steady

Up 22.62% in August as passenger car sales drop 5.9%, while exports grows by 35%.

Even as passenger car sales declined sharply for a second time this year, on the back of rising interest rates and increased fuel prices, the commercial vehicle (CV) segment, which is often regarded as the barometer of economic health of a nation, continued to post sturdy growth numbers last month.

The country's top commercial vehicle manufacturers such as Tata Motors, Eicher Trucks and Buses, Ashok Leyland, Mahindra & Mahindra and Asia Motor Works (AMW), together registered growth of 22.6 per cent selling 64,248 units in August as compared to the 52,394 units sold during the corresponding period last year. The increase in commercial vehicle sales, say industry experts, is taking place on account of pent-up demand, planned implementation of infrastructure development projects and introduction of new products by CV manufacturers.

“Overall, the economic activity is going strong. Freight movement is picking up because of which demand for commercial vehicles is seeing an uptick. Besides, there is a pent-up demand for CVs. Sales in the segment had fallen sharply between 2008 and 2010 during the economic slowdown. Those consumers who had postponed purchases at that time are now going ahead and replacing their fleet,” said Abdul Majeed, leader, automotive practice, PricewaterhouseCoopers.

The growth, in fact, is coming despite broader inflationary pressures, high fuel costs and rising interest rates even as car sales, which are more sensitive to such reasons, buckled under pressure during the month.

Tata Motors, the country's biggest manufacturer of light and heavy trucks and buses, recorded a growth of 24.6 per cent selling 38,122 units in the domestic market last month. The biggest growth driver for the company was the passenger and goods carrying light commercial vehicle range which grew by 36 per cent to 21,421 units this August.

Medium and heavy commercial vehicles, in the meantime, achieved a growth of 12 per cent selling 16,701 units.

An analyst at a leading financial advisory services firm, requesting anonymity, said, “The growth in the commercial vehicle segment is being propelled by sales of light commercial vehicles which find a lot of demand in the agricultural sector. The monsoons have been good this year so sales have consequently gone up.”

While sales for Mahindra & Mahindra shot up by 35 per cent to 10,139 units, those of new entrant Mahindra Navistar Automotive Ltd scaled up by 30 per cent to 1,135 units. M&M is the third largest CV manufacturer in the country. Both companies are confident of growth prospects in the segment and are looking at launching new products in the coming months to sustain consumer interest.

Eicher Trucks and Buses, posted growth of 32 per cent in sales at 3,407 units last month. The company is expecting demand to stay high as CV consumption form the agricultural sector generally grows in the second half of the year, says a senior executive at the company.

AUGUST BLUES FOR PASSENGER CARS
Sales of passenger cars in the domestic market declined for the second month in a row. Volumes dropped by 10.08 per cent to 144,516 units in August on the back of rising lending rates and lower production levels at the country’s largest car maker Maruti Suzuki India Ltd (MSIL).

According to the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales stood at 191,914 units as compared to 203,872 units sold in the same month last year.

The numbers were further dragged down by Maruti Suzuki, which reported a loss in production due to the ongoing labour unrest at its plant in Manesar. Maruti recorded 16.82 per cent decline is sales last month at 77,086 units from 92,674 units sold in the same month last year.

Sales of Hyundai Motor India were down by 6.7 per cent to 26,677 units. Tata Motors fared worse with wholesale numbers dropping by 33 per cent to 16,829 units. Sales fell across the Indica, Indigo and utility vehicles’ range with small car Nano recording the steepest drop of 85 per cent at 1,202 units.

Passenger car exports from India, however, grew by 34.9 per cent during the month due to increase in demand from non-European nations.

SIAM data reveals car makers sold 49,642 units in overseas markets last month compared to 36,810 units in the corresponding period last year. Hyundai, which is the largest exporter of cars reported an increase of 10.52 per cent in overseas sales at 24,353 units. For Ford, too, exports grew by 55.85 per cent to 1,532 units.

Two-wheeler sales increased by 16.10 per cent last month to 1,111,340 units from 957,236 units in August 2010. While motorcycle sales grew by 15.4 per cent during the month to 839,772 units from 727,542 units in the corresponding month last year, the scooter segment witnessed a growth of 24.8 per cent at 212,750 units.

Hero MotoCorp’s sales increased by 18.87 per cent to 491,120 units. Bajaj Auto, in the meantime, posted an increase of eight per cent at 226,559 units.