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The excise duty cut announced last month in the interim budget has had a marginal impact on car demand as the industry continues to feel the heat of high fuel prices, expensive finance costs and tighter lending norms.
Demand remained sluggish in February with top eight of the 17 companies accounting for 92% of total domestic sales reporting a growth of 2.3% last month at 201,445 units as compared to the same month last year.
The finance ministry cut excise duty in the range of four to 6% on compact hatchbacks, large sedans and utility vehicles last month. Despite the additional 5-10% discount offered by dealers buyers have not shown much excitement.
On the back of fresh dispatches of its newest model Celerio Maruti Suzuki (MSIL), India's largest passenger vehicle company, managed to report a 1.8% rise in total domestic sales last month at 99,758 units as against 97,955 units sold in the same month last year.
Combined sales of the segment where MSIL sells M800, Alto, A-star and WagonR dropped 9.6% while the segment which saw the addition of Celerio and which also has Swift, Estilo and Ritz saw a growth of 19.4%. Eeco and Omni segment too witnessed a rise of 22% during the month.
Korean brand Hyundai reported almost zero growth last month (sold three units more than February 2013) at 34,005 units as compared to 34,002 units sold in the same month last year. Nearly a third of its domestic sales came from the newly launched Grand i10.
Rakesh Srivastava, Senior vice president (Sales and Marketing), Hyundai Motor India said, "Post the reduction in excise duty, enquiry inflow has increased...it is expected that this would lead towards creation of a positive momentum."
The biggest disappointment came from utility vehicle major Mahindra & Mahindra, which was also pegged to be the biggest beneficiary of the excise duty cut. UV and car sales of the Mumbai-based company dropped to 19,308 units during the month, a fall of 17.5% compared to 23,421 units sold in the corresponding month previous year.
Sports utility vehicles saw the the biggest cut in excise duty at six% in the budget. M&M with a portfolio of six models benefiting from the cut has the largest line-up of UVs in India. The company also retails a hatchback (Verito Vibe) and a sedan Verito on which duties were slashed by four%.
Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra said, “The auto industry has received the much needed boost in terms of an excise duty reduction and this has resulted in higher enquiries over the last one week. The recently concluded Auto Expo has also been a success which will only help in generating demand. We are hopeful that these positive initiatives would be the beginning of a gradual upswing for the auto industry, as we move into the next financial year.”
Like M&M, Toyota Kirloskar (TKM) who also did not introduce any new model in the volume segment witnessed a steep decline in sales during the reporting month. Total domestic sales dropped to 10,100 units, a fall of 20.8% as compared to 12,756 units sold in the same month last year.
N Raja, Senior Vice - President, Sales and Marketing, TKM, said “The excise duty cut was a welcome step taken by the government to revive sale. However, other factors like high interest rate, falling rupee and unstable fuel pricing still loom large in the market."
Honda Car India saw its City sedan surge to the top spot in its segment beating Hyundai's Verna which has been the leader in the segment in 2013. The company closed February with domestic sales of 14,543 units with nearly half the sales coming from the fourth generation City. The Amaze compact sedan closely followed the City with sales of 6030 units.
Jnaneswar Sen, Senior Vice President – Marketing & Sales, HCIL said, “We are happy to see the huge demand for the all new Honda City which has gained the leadership position in its segment from the first month itself. The deliveries for the petrol City have begun from February and with both our car manufacturing plants in operation, it will aid in quick delivery of cars and cater to the strong demand from our customers."
Four Wheelers
| Company | February 2013 | February 2014 | % Change |
| Maruti Suzuki | 97,955 | 99,758 | 1.84 |
| Hyundai Motor India Limited | 34,002 | 34,005 | 0 |
| Tata Motors | 10,613 | 11,325 | 6.7 |
| Mahindra & Mahindra | 23,421 | 19,308 | -17.56 |
| Toyota Kirloskar | 12,756 | 10,100 | -20.82 |
| General Motors | 7,106 | 5,607 | -21.09 |
| Ford India | 4,490 | 6,799 | 51.4 |
| Honda Cars India | 6,510 | 14,543 | 123.39 |
| TOTAL | 196,853 | 201,445 | 2.33 |
Domestic Sales
Source:- Companies
Two-wheelers
| Companies | Feb-13 | Feb-14 | % Change |
| Honda Motorcycle | 228,444 | 328,521 | 43.8 |
| TVS Motors | 160,895 | 170,293 | 5.84 |
| Mahindra Two Wheelers | 5623 | 18,553 | 230 |
| Total | 394,962 | 517,367 | 30.99 |
Total Sales
Source :- Companies
Highlights
*Positive impact seen of the excise duty cut on the industry
*Excise duty was reduced to 8% from 12%.
*TVS reduced prices between Rs 850 and Rs 3,500 across its product range
*Honda's domestic market share goes up to 26%
*TVS Motor's two wheeler export grew by 26%.
*Mahindra Two Wheeler volumes were spruced up by the Centuro motorcycle
