Auto Sales Enter the Slow Lane

Companies post single-digit growth in April sales, expect interest rate hikes to hit demand further

The first month of the fiscal year showed signs of a tough year ahead for the Indian auto industry as major companies like Maruti and Hyundai posted single-digit sales growth in April. The slowdown in sales can be attributed to rising interest rates on auto loans and higher sticker prices.
The country's largest carmaker, Maruti Suzuki, reported a mere 4.4% increase in sales at 97,155 units. Its domestic sales grew 8.8% to 87,144 cars in April over 80,034 cars sold last year. Its largest volume segment comprising hatchbacks like Alto, WagonR, Estilo, Swift, A-Star and Ritz witnessed a lower 1.8% growth in sales at 57,443 units in April 2011. Company executives said that demand has been tapering off with sales of its basic models impacted by declining customer demand in the past two months. However, stronger demand for its sedans comprising Dzire and SX4 jumped 39% to 13,899 in the same period, they added.
The country's second-largest carmaker, Hyundai Motor India, reported almost a flat month of its total sales for April at 52,058 units, with the domestic sales rising 11% to 31,636 units while exports plunged 13.2% to 20,422 units.
Arvind Saxena, director (marketing & sales), Hyundai, said: "Rising interest rates have led to reduced enquires and the conversion rate of customers from enquiry to purchase of cars too has slowed down. We expect the same trend to continue in the coming months." ET had reported in its April 30 edition that the growth in passenger cars is tapering off in April after a high of 30% jump in the FY11. Analysts tracking the sector said the car sales would be moderated in the coming months. "There will be an impact of the higher prices of cars and fuel. Customers are taking into account the overall rising costs of ownership that will only increase in the coming months," Abdul Majeed, analyst and partner with PriceWaterhouse, said.
There were also companies that posted negative sales in April. Honda Siel Cars India reported 44% fall in sales at 2,012 units in April against 3,578 cars sold during the same month last year. General Motors India sales, too, declined 5.19% to 10,050 in April 2011 over the same month last year. Ford India also reported 2.5% fall in sales at 7,319 units.
A few carmakers also posted a higher jump in April sales on the back of smaller base of 2010.
Toyota Kirloskar Motor posted a 61% jump in sales on the back of huge demand for its latest sedan Etios. "This growth can be directly attributed to the great customer response to Etios sedan. We have so far sold 12,758 units since its launch in December last year," Sandeep Singh, deputy MD (marketing), Toyota, said. The Czech carmaker, Skoda Auto India, almost doubled its sales at 2,446 unis against 1,285 cars last year.
Two-wheeler companies continued to have a steady run in the domestic market. The country's largest two-wheeler maker, Hero Honda, posted its highest-ever sales in its 27-year history at 5.17 lakh units, registering a 39.1%rise over the last year.
This is the second consecutive month of high sales for the company with its previous best sales at 5.15 in March this year.
"The strong sales performance comes on the back of robust demand across all domestic territories and our different two-wheeler segments," Anil Dua, senior VP, Hero Honda, said.
The country's second-largest two-wheeler maker Bajaj Auto has a muted performance with a 16.7% rise in motorcycle sales at 3.22 lakh units in April, including 1.26 lakh exports. Japanese twowheeler maker Suzuki Motorcycle India also reported a 41% growth at 29,369 units on the back of strong demand for its 125 cc Access scooter.
Bumpy Ride

• Maruti Suzuki reported
a mere 4.4% rise in sales while domestic sales grew 8.8% in April

• Hyundai Motor posted a flat
sales for April at 52,058 units, with the domestic sales rising 11% to 31,636 units while exports plunged 13.2%

• GM sales, too, fell 5.19% while
Ford India reported 2.5% decline in sales

• Analysts say car sales would
be moderate in coming months as customers are taking into account the overall rising costs of ownership