The Hindu Business Line : Monsoon blues continue in auto industry

New Delhi, Sept. 11 The festive season may be set to begin, but the monsoon blues continue to loom over the growth of the auto industry with sales in most segments recording negative growth.

Apart from passenger vehicles which grew at about 17.16 per cent in August 2007 as against the same period last year and commercial vehicles segment which recorded a marginal growth, three-wheelers and two-wheelers sales continued to decline.

In the passenger cars segment, except for Maruti Udyog that has continued to record a double digit growth and General Motors which increased its sales with its newly launched models, most other car makers continued to take a hit as high interest rates impacted the growth in the auto industry.

“With 80 per cent of our cars being sold on financing, interest rates have impacted as customers postponed purchases. However, with the festival season to begin, the outlook seems to be positive,” said Mr Masahiro Takedagawa, President, Honda Siel Cars India. Apart from interest rates, the company was expanding capacity, hampering the production which led to drop in its sales, he added.

While most manufacturers are harping on the festival season for sales to revive, there remains a concern that despite the festival season, growth may still remain low compared with last year.

“The passenger cars have grown by 7 per cent as compared to July and the two-wheelers at about 6 per cent compared to the previous month. This certainly shows that there is traction in the market and with the coming festival season sales would pick up,” said Mr N. R. Narayanan, Group Business Head, Vehicle Finance, ICICI Bank. Considering the fact that passenger car segment grew at about 12 per cent in the first four months and has increased to 14 per cent, the segment would grow to about 15-17 per cent in the coming few months.

But for the two-wheeler industry, which remains the most affected by the slowdown, meeting last year’s sales numbers would also be a challenge, added Mr Narayanan.

Marginal increase

The commercial vehicles category witnessed a growth mainly with sales in the light commercial vehicles posting a marginal increase as against the medium and heavy commercial in which sales continued to fall.

In the two-wheeler industry, motorcycles sales continued to fall as sales have gone down to 4, 18,702 units in August 2007 from 4, 70,955 units in the same month, a year earlier. However, the scooter and the scooterette segment drove sales in the segment at 91,158 units from 72,391 units last year.

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