The Hindu Business Line : June car sales up 24.5 pc as price hikes loom

Industry analysts point out that the momentum in sales could partly be a result of announcements on impending price hikes by carmakers over the last two months. In fact, passenger car sales in May had jumped by 30 per cent year-on-year, while the increase in April was 15 per cent.

"Carmakers and even bike manufacturers such as Hero Honda have indicated likely price increases necessitated by higher input costs putting pressures on margins. Automobile companies, even in the past, have tended to forewarn of price increases at least two to three months in advance so as to derive maximum volumes," points out an industry observer.

In fact, Hyundai Motor India on Tuesday increased the prices of all its models in order to cover increased input costs. Commenting on the price hike, Mr H.S. Lheem, Managing Director, HMIL, said, "The price hike has been necessitated by a variety of cost push factors like surge in freight costs and raw material. While we have tried to absorb as much of the cost as we can we are forced to pass some of this on to our customers." The price hike is about Rs 3,500 for the Santro, Rs 1,600-2,600 for the Accent and Rs 1,601-2,601 for the Getz.

Maruti has also said that it will be hiking prices to offset increased input costs while several other carmakers including General Motors have indicated their intention to raise prices.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), sales were up for seven of the 11 car manufacturers in June. While Maruti sales were up 13 per cent at 37,704 units, Hyundai saw a growth of 58.3 per cent at 16,989 units. Sales of Tata Motors cars were up 30.2 per cent.

Meanwhile, demand for motorcycles remained high with sales jumping by 26.9 per cent at 5,27,434 units in June against 4,15,598 units in the corresponding month last year. Segment leaders Hero Honda and Bajaj Auto saw healthy demand while others like TVS Motors, Yamaha and Honda Motorcycle and Scooter India (HMSI) also saw increase in sales.

Overall two-wheeler sales, including scooters and mopeds, grew 23.9 per cent in June at 6,31,687 units against 5,09,769 units in June 2005, SIAM said. This included 77,552 units of scooter/scooterettee which saw a 17.6 per cent increase in sales on healthy demand for vehicles of HMSI and TVS Motors.

Domestic commercial vehicle sales grew 25.5 per cent in June at 33,954 units against 27,034 units in the corresponding month last year.

In the medium- and heavy-commercial vehicles segment (M&HCV), numbers were up 20.8 per cent at 19,584 units. Light commercial vehicle sales were up 32.7 per cent at 14,370 units against 10,827 units in June 2005.