The Hindu Business Line : Auto: No surprises in Feb sales numbers

February sales numbers of Maruti Suzuki reiterates the trend of a moderation in growth that the company has witnessed since December. After clocking a growth of 27 per cent year-on-year in November, the number of vehicles sold grew by 7 per cent year-on-year in December, 4.2 per cent in January and now, by about 1.3 per cent.

This temperance in growth is not totally unexpected. The introduction of the Swift diesel and the new-look Zen (Estilo) in the A2 (compact) segment and the SX4 in the A3 (mid-size) segment last year, propped volume growth in 2007. Due to a high-base effect, growth now appears moderate.

In the case of Mahindra & Mahindra, utility vehicle sales witnessed a shift in trend compared with previous months. This segment, which witnessed a minor year-on-year decline in December and January, has grown by about 32 per cent in February. This can partly be attributable to recovery in sales of Scorpio.

Two-wheeler sales

Sales of Hero Honda, which showed a positive growth for four straight months until November (due to new launches and discounts in the entry segment), were down 5.3 per cent in the current month.

Bajaj Auto too continued to remain in the negative territory with an 8 per cent decline in two-wheeler sales. Bogged down by delay in product launches and a patent tussle, TVS Motors too has not been able to stir into the positive zone.

The excise duty cuts for the small car and two and three-wheelers announced in the budget is a shot in the arm for the industry, which has been on a slowdown.

Price reductions arising from the duty cuts coupled with higher disposable income in the hands of consumers (arising from lower tax outgo) is expected to boost sales and restore health to the industry.

With the Budget announcing largesse for the farmers too, companies like Mahindra and Mahindra could also witness an increase in tractor sales, which, in the last one year has been uninspiring. Sales numbers of the next few months need to be closely monitored to establish if a recovery is truly a live possibility.

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