Passenger vehicle sales up 11%

218,828 units sold in June; growth registered for the second straight month

 

Speculative demand arising from uncertainty over extension of excise concessions and improved consumer sentiments over formation of a stable government at the Centre perked up sales of passenger vehicles for the second straight month in June this year.

According to data released by the Society of Indian Automobile Manufacturers (Siam) on Wednesday, 218,828 passenger vehicles were sold in the domestic market last month - an increase of 11.3 per cent over the 196,726 units sold in the corresponding period last year.

The double-digit spurt in passenger vehicle sales has come after a gap of two years. In October 2012, sales of passenger vehicles had increased by 32 per cent but the growth was on a low base owing to disruption in production because of labour unrest at Maruti Suzuki. Prior to that, passenger vehicle sales had grown by 10.8 per cent in July 2012. Vikram Kirloskar, president, Siam said: “Sales increased in June due to speculative demand. Consumers were uncertain whether the excise concessions would be extended and they advanced purchases. We have to wait for some more time to see whether the turnaround seen in May and June is definite.” The United Progressive Alliance government in the interim Budget had slashed excise duty on automobiles in the range of three to six per cent till June 2014 to revive growth in the sector. This concession was later extended by the new government on June 25 till December 31, 2014.

Given the improved environment in the domestic market, Maruti Suzuki saw sales jump by 31.1 per cent to 100,964 units last month. Rival car maker Hyundai, too, witnessed demand grow by 9.5 per cent to sell 33,514 units in June.

Even as sales picked pace in the passenger vehicle segment, improvements were seen in demand for commercial vehicles as well. “For the past three months, constant improvement has been happening in the commercial vehicle space. Although it still remains in the negative territory, the opening of some of the mining and infrastructural projects have helped the sector,” said Vishnu Mathur, director-general, Siam.

The sales of commercial vehicles were down by nine per cent to 51,119 units in June. Sales of commercial vehicles had dropped by 20.23 per cent to 632,738 units in the last financial year.

In the two-wheeler segment, SIAM said sales grew by 13 per cent in June to 1,261,589 units from 1,116,538 units in the year-ago period. While sales of motorcycles went up by 9.6 per cent to 876,196 units against 799,254 units in the year-ago period, those of scooters rose 25.2 per cent to 323,178 units.

Kirloskar said a price revision is expected soon.  Discounts are tapering. The industry cannot afford it. Cost of raw material is increasing, car makers have to be realistic in pricing. They need to make money to reinvest. They have to take a price hike sooner or later given the inflation.”