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Utility vehicles, LCVs begin to lose steam

Low consumer sentiment, new taxes take a toll

Swaraj Baggonkar  |  Mumbai 

The effect of the broader slowdown in the automobile industry is now taking a toll on high-growth segments such as utility vehicles and mini trucks. This, coupled with lower consumer sentiment and new taxes imposed by the Centre on sports utility vehicles, has led to stifled demand.

According to data provided by the Society of Indian Automobile Manufacturers (Siam), utility vehicles recorded sales of 40,563 units in April, compared with average monthly sakes of about 46,000 units last financial year. Also, from growth of 52 per cent in 2012-13, utility vehicle sales grew only four per cent in April, weighed by the additional tax. Utility vehicle manufacturers such as Mahindra & Mahindra and Tata Motors had raised prices of their models, following a rise of three per cent in excise duty.

Demand for models such as Mahindra Quanto, Scorpio, XUV500, Tata Safari and Sumo has fallen in the last couple of months. However, with new launches in the segment, especially in the compact sports utility vehicle space, expected in the coming months, manufacturers are upbeat about prospects.

P Balendran, vice-president (corporate affairs), General Motors, said, “There is a lot of negative sentiment in the market right now. Until the interest cost comes down, the situation would not improve. We are expecting the passenger car segment to de-grow two to three per cent and the utility vehicle segment to grow 12-13 per cent.”

The mini-truck segment (up to 2-tonne capacity) has seen growth fall, following expensive loans, reduced economic activity and challenging freight rates in several sub-markets. From an average 40,000 units a month last financial year, sales of goods-carrying light commercial vehicles (LCVs) fell have fallen to 33,721 units in April; growth slowed from 16 per cent last year to three per cent in April. Models in this segment include the Ace family of LCVs from Tata Motors, the Dost from Ashok Leyland and Mahindra & Mahindra’s Maxximo.

The automatic scooter segment posted healthy growth in April. More than 2,61,000 scooters were sold during the month, compared with an average 2,43,000 scooters a month in 2012-13. Due to the high base effect, absolute growth in the scooter segment (14.7 per cent) appears relatively low compared to about 20 per cent growth during most months of 2012-13. However, absolute growth in sales is higher.

Demand for motorcycles fell two per cent in April.

Honda, the leader in the scooter segment, as well as Yamaha and TVS Motors, are trying to strengthen their positions through various launches in the coming months. Traffic conditions in major cities and the ease of riding un-geared scooters has led to a rise in demand for these scooters, say market watchers.

First Published: Sat, May 11 2013. 22:28 IST