May auto sales show green shoots of recovery (Roundup)

Recovering from high fuel and interest costs, automobile manufacturers showed healthy sales performances during May.

Sales of India's largest passenger car manufacturer Maruti Suzuki grew by 13.8 percent in its total sales for May which stood at 114,825 units, up from 100,925 units sold in the corresponding month of 2014.

Domestic sales of the company during the month under review grew by 13 percent at 102,359 units from 90,560 units sold in May 2014.

Exports during May zoomed by 20.3 percent at 12,466 units from 10,365 units shipped out during the corresponding month of 2014.

Chennai-based automobile manufacturer Hyundai Motor's (HMIL) overall sales including exports grew by 1.5 percent and stood at 52,515 units from 51,718 units sold in the corresponding month of 2014.

"In a market experiencing low growth with decreasing contribution of rural and diesel vehicles sales, Hyundai volumes grew to 37,450 units," said Rakesh Srivastava, senior vice president for sales and marketing, HMIL.

The company's domestic market sales grew by 3.4 percent and stood at 37,450 units during the month under review from 36,205 units sold in May, 2014.

However, the largest passenger car exporter in the country only managed to ship-out 15,065 units in May, 2015, which is a decline of 2.9 percent from 15,513 units being sold abroad in the corresponding month of the previous year.

Other major players in the Indian auto market, Tata Motors and Mahindra & Mahindra (M&M) reported a mixed sales results.

Tata Motors' overall sales, including exports, during May increased by five percent and stood at 39,496 units from 37,538 units sold during the like period of last year.

Mahindra and Mahindra's overall sales including exports during May declined by 3 percent and stood at 36,706 units down from 37,869 units in the corresponding month of 2014.

"The auto industry has been showing signs of recovery and it is important that factors like an interest rate cut if considered, would accelerate growth," said Pravin Shah, chief executive of the automotive division, Mahindra and Mahindra.

Japanese automobile major Honda's domestic sales during the month under review marginally grew by just one percent at 13,431 units from 13,362 units sold in the corresponding month last year.

Two-and-three-wheeler maker TVS Motor Company closed last month with a six percent growth in sales 220,079 units from 206,813 units sold in the corresponding month of 2014.

Suzuki Motorcycle India registered a 3.64 percent increase in its May 2015 sales which stood at 33,287 units from 32,117 units sold in the corresponding month of last year.

Two-wheeler major Honda Motorcycle and Scooter India's sales grew by three percent and stood at 367,226 units from 355,530 units sold in May, 2014.

However, Hero MotoCorp's May sales declined by 5.41 percent and stood at 569,876 units from 602,481 units sold in the corresponding month of last year.

According to analyst, the results show conditions for a demand growth getting built.

"Typically, the urban demand for cars is supported by the growth of disposable income being significantly greater than the growth of inflation. What is critical would be the extent to which this is sustained - while inflation may stay low, salary growth will happen if jobs are created," said Kumar Kandaswami, senior director with Deloitte in India.

"The other variables that come into play are the household savings that the potential car buyers will want to take back to the levels they were at in the high growth years and the ability of the potential customers to accept the varying fuel prices."

He added that any rural slow-down will impact the entry level hatchbacks in passenger cars and SUVs (sports utility vehicles) and the economy motorcycles.

However, the results failed to impress the markets. The automobile index on the Bombay Stock Exchange (BSE) declined by 65.71 points and stood at 19,014.08 points.

"Auto industry monthly sales numbers failed to cheer the street," said Gaurav Jain, director, Hem Securities.