The Hindu Business Line : April auto sales see growth in all segments

Treading caution
The dispatches for May are likely to fall as interest rates continue to move up and April figures cannot be seen in isolation, say analysts.

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New Delhi, May 8

The beginning of the current financial year seems to be good for the domestic automotive industry. For the first time since April last year, all the segments have recorded a healthy growth.

The two-wheeler industry that was the worst-hit last fiscal, posted an 8 per cent increase in sales compared with the corresponding period last year, according to the data released by the Society of Indian Automobile Manufacturers.

The growth in the two-wheeler sales has been attributed mainly to the marriage season rather than due to excise duty reduction announced in the Budget.

“The subsequent steel price hike has eaten into any benefits that the excise duty cut offered,” said Mr Prem Bagga, who is a dealer of Bajaj Auto in the city. But due to the marriage season, there has been a strong demand for motorcycles, he said.

Wait-and-watch

Though two-wheeler sales in April have shown good numbers, industry analysts are taking a cautious approach. “The marriage season this year started earlier resulting in higher sales volumes, especially in the entry-level segment last month.

“But the dispatches for May are likely to fall as interest rates continue to move up. So April figures cannot be seen in isolation to come to a conclusion that two-wheeler sales will pick up,” said a Mumbai-based auto analyst from B&K Securities India.

Hero Honda reported an 8 per cent increase in sales at 2,76,580 units, followed by the second largest player Bajaj that sold 1,38,117 units, clocking a 9.18 per cent growth during the month against the corresponding period the previous fiscal.

Higher volumes

Fears of possible price hike in May combined with the marriage season also led to passenger car sales reaching its highest percentage growth rate. Maruti posted an increase of 22 per cent at 51,766 units. Hyundai at 21,492 units recorded a 36.91 per cent growth as demand for its premium hatchback i10 continued to be high.

Last month, most of the manufacturers such as Maruti and Hyundai had indicated that they were watching the steel price and depending on the rise in input costs, the companies would take a call on hiking their prices. This also led to higher volumes last month, said industry analysts.

CV segment

The commercial vehicles industry, which had started showing recovery since the last few months, also reported encouraging numbers with both the light and medium and heavy commercial segment sales on a high.

“Unlike in the case of cars, which is a luxury and a personal commodity, there is a return one gets on the purchase of commercial vehicle due to which even if the interest rates move up, it does not affect the sales so much,” said an ICICI Bank official.

The medium and heavy commercial vehicles segment grew 5.28 per cent to 18,608 units and the light commercial vehicles sales rose 10.74 per cent to 14,663 units, said the SIAM data.

In Chennai today, Mr R. Seshasayee, Managing Director, Ashok Leyland Ltd, a leading commercial vehicles manufacturer, told a press conference that business sentiment appeared “to be very low,” which was a worrying factor. He expected the commercial vehicle industry to grow in “a high single digit” this financial year.

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