The Hindu Business Line : Auto sales: Festive season sparkle missing

A file picture of Mr Masahiro Takedagawa (right), President and CEO, Honda Siel Cars India, with Mr Tatsuya Natsume, Director (Marketing), Honda Siel Cars India, and Mr Jnaneswar Sen, Vice-President, Marketing, at the launch of `Third Generation Honda City’.

Our Bureau

Hyderabad, Oct. 26 With the Dasera-Diwali festival and wedding season setting in, early pointers show that the overall automotive sales volumes are yet to pick up, according to Mr Jnaneswar Sen, Vice-President-Marketing, Honda Siel Cars Ltd.

While the numbers gathered early next month will help assess the overall sales volumes, from the information in the market, it is clear that the anticipated buoyancy is missing, he told Business Line.

Speaking after the launch of Honda City variant here, Mr Sen said the cumulative impact of higher interest rates, subdued market sentiment and cautious approach of buyers are among key reasons for this current sentiment.

After muted business in July and August and Shraad period (when people keep away from new vehicle purchases), automotive companies were betting on the festive and wedding season in the north. But early indicators show that the volumes have not picked up as yet, he explained.

The automotive industry had anticipated overall growth of about 12 per cent during 2008 and first nine months numbers shows that it is likely to be about 6-6.5 per cent.

While being cautiously optimistic about the growth of the sector, the Director Sales Group, Hyundai Motors India, Mr Y.K. Koo, told Business Line last week that it would take about four-five months for the auto sales numbers to get into a much faster growth pace.

The market conditions are such that the anticipated growth of 12 per cent is near impossible to achieve. The first nine months show that it is much lower. And it is unlikely that this gap will be made up later during the year, Mr Koo said.

In fact, after October and November, the sales volumes are likely to come down in December as people wait for New Year, Mr Koo said.

After the launch of Tavera Neo in Hyderabad recently, the Vice-President—Marketing, Sales, General Motors India, Mr Ankush Arora, said the automotive sales this year for the industry will be higher than the overall numbers registered last year but this is likely to be lower than the projected numbers. July, August and September numbers have been subdued.

Mr Arora maintained that it will take at least six months for the automotive sector to revive. According to Auto sector update by Angel Broking, performance in September 2008 was mixed, while the two-wheelers registered good numbers, the four-wheeler segment has been adversely impacted due to rising interest rates and also slowdown in lending.

With companies building inventories for the festive season, it would be worth tracking if the lag effect would be made up.

Mr Sen said “the company has received over 2,000 bookings since the announcement of the launch of third generation Honda City in India. We expect to commence productions later this month and hand over them by middle of November.”

The company has already stopped production of its most popular car in the country – Honda City – which sold more than 1,76,000 cars in the last five years since its launch in the country. That means only the new City variants will be offered to buyers next month.

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