February surprise: Auto sales zoom 18.78%

After a worrying 7 per cent fall in sales in January, Maruti Suzuki, Hyundai Motors, Tata Motors, Mahindra & Mahindra and Honda Siel have notched up an impressive 18.78 per cent growth in sales in February.

Auto executives, however, remain sceptical whether the momentum can be sustained for the rest of 2009.

Strong demand for the SX4 and DZire models helped Maruti Suzuki, the country’s largest passenger car maker, record an impressive 19 per cent jump in sales in the domestic market, hitting a new record of 70,625 units in February.

For the rest, the acceleration in sales in February was mostly led by new launches. For instance, Korean car maker Hyundai saw a huge 45 per cent jump, mainly on the back of i10 and i20 sale . New launches like Xylo also helped Mahindra & Mahindra record a 17 per cent jump in sales. And thanks to the new Honda City model that was launched last month, Honda sales went up by 47.83 per cent in February, hitting 5,579 units. Reflecting the troubles with its Detroit parent, General Motors, however, continued to see sales slide.
 

SUDDEN REV Domestic passenger car sales
Company	Feb 08	Feb 09	% change
Maruti Suzuki	59,311	70,625	19
Hyundai	14,600	21, 215	45.3
Mahindra & Mahindra	12,562	14,720	17*
General Motors	5563	4921	-11.54
Honda	3774	5579	48
Tata Motors	18766	19039	1.4
total	114576	136099	18.78
*utility vehicles                                Source: Companies

Overall car sales fell 0.5 per cent in April-December 2008.

Still, no one in the industry is celebrating. "It is very difficult to say if the worst is over, considering the economic situation. What one can say is that we might not see a decline of sales now like we did previously," said R C Bhargava, chairman of Maruti Suzuki. He expects sales growth this fiscal to be in the lower single-digits.

Demand might rise now because public sector banks are offering lower interest rates and also from selective overseas demand.

"The government’s announcement of excise duty cut in December has also been a big booster,” Bhargava said. He added that exports of small cars to Europe have not really fallen and all this has pushed sales.

He also expects easier repossession norms of cars by banks from customers who default on payments to encourage private banks to step up lending for car purchases.

Arvind Saxena, senior vice-president, marketing and sales, Hyundai, said February sales this year are high because customers did not buy cars in the same month last year as they expected duty cuts in the Budget. As a result, sales were deferred to March, which saw impressive numbers.

“We expect a fairly flat sales growth curve for the industry for the first quarter ending March 2009,” he warned.