Despite record car sales, auto numbers show in Jan

Auto sales growth in January this year slowed down to 19 per cent after rising 31 per cent in calendar 2010 because of the low base effect of 2009 going away and rising input costs and interest rates leading to higher prices.

According to the Society of Indian Automotive Manufacturers (SIAM), car sales in the month hit a new record at 1.84 lakh units, though the growth was lower at 26 per cent over the 36 per cent rise seen in the same month last year. The growth in passenger car sales has been attributed to growing income levels and new launches, besides the deferment of some purchases from December as buyers usually prefer 2011 registration.

“The rate of growth has come down and it is a cause for worry. The moderation will continue for the next few months. With an added increase in input costs and interest rates, we are expecting this to be a challenging year. We expect total growth in 2010-11 to come down to 25 per cent,” said Mr Sugato Sen, Senior Director, SIAM.

Industry experts added that expectations of a rise in excise duty in the Budget 2011-12 may also push up sales in February.

Sales in the passenger vehicle segment, which includes cars, utility vehicles and multi-purpose vehicles rose 25 per cent. Car market leader Maruti Suzuki's sales rose 26 per cent (86,285 units), while rivals Hyundai and Tata Motors recorded two per cent (30,301 units) and 13 per cent (25,750 units) higher sales.

In the last two months, carmakers such as General Motors, Maruti Suzuki, Hyundai Motor India and Volkswagen have raised vehicle prices by up to three per cent due to rising input costs. Meanwhile, State Bank of India raised its interest rates on car loans from nine to 11 per cent, while HDFC increased car loan rates to 11-13 per cent.

2-wheelers ride high

Two-wheeler sales also rose 17 per cent, with motorcycle sales rising 15 per cent to 7.47 lakh units and scooters 30 per cent (to 1.80 lakh units). Market leader Hero Honda saw a growth of 16 per cent (4.23 lakh units), while Bajaj Auto's sales rose seven per cent (1.92 lakh units).

Commercial vehicle sales rose 13 per cent, though the Medium and Heavy Commercial Vehicles (M&HCV) only saw 7 per cent (27,713 units) higher sales. Light commercial vehicle sales rose 18 per cent to 33,040 units. “There has been a very low growth in the M&HCV segment, mainly because state transport corporations have not taken delivery of passenger buses under the JNNURM scheme. Payments are not forthcoming and about Rs 1,000 crore is stuck in such deals. This problem started last November and we are told that the Ministry of Urban Development has not released the funds,” said Mr Sen.

Exports rose 28 per cent, largely buoyed by the two-wheeler segment. Passenger vehicle exports continued to be in the grey, at minus 15 per cent in the month, largely on the back of poor European demand.