Barring Tata Motors and Mahindra & Mahindra, which saw a month-on-month decline in sales, most other passenger car majors reported a spike in sales volumes. Sales of India's largest car manufacturer Maruti Suzuki shot up nearly 20%, while Hyundai Motors saw a 12.8% increase in its domestic sales even while the company showed an overall reduction in the headline number due to a crash in exports. Ford India, Toyota Kirloskar and Honda Cars all reported a jump of between 17% and 50% in the number of cars sold last month.
Two-wheeler majors were also on a high. Honda Motorcycles saw a volume expansion of 50%, TVS Motors of 24%, Yamaha of 40% and Hero Moto Corp of 8%. Bajaj Auto, which is the country's largest exporter of three-wheelers, meanwhile saw exports surge by 40% and an overall increase in sales by 4%. Robust rural demand fuelled by increased election expenditure and the onset of the marriage season in the north of the country benefited companies said analysts.
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Commercial vehicles sales, a barometer of industrial activity in the country, continued to languish in negative territory however, with Tata Motors, Ashok Leyland and M&M posting a 27, 9 and 14 percentage point decline in sales, as compared with a month ago. Sequentially, however, MCV sales showed an uptick even though LCVs continued their poor show and tractor sales remained muted as a result of the unseasonal rains that have affected demand.
"We definitely seem to be hitting a bottom as far as CVs are concerned. Even though the trend will be clearer in the next 2-3 months, on a sequential basis there has been an improvement certainly," said Yaresh Kothari, an analyst with Angel Broking in Mumbai.
Better consumer sentiment following the elections will ensure that the momentum in the passenger vehicle segment also continues, even though a real pickup in demand is likely only during the festive season, feels Kothari. While the RBI refrained from cutting rates today, it is expected to slash the repo rate 0.5% by the second quarter of 2015, according to the median of 15 economists surveyed by Bloomberg. This will further help revive demand.
New launches, meanwhile, will lead to increased footfalls, hope car makers. Maruti's improved performance was largely on account of the 53% sales increase in its super compact segment and the launch of the Celerio, which reportedly has a waiting period of 4-6 months. Similarly the newly launched Amaze helped Honda drive ahead with strong numbers. And Hyundai's Xcent which was launched in March this year is doing wonders for the company.
"The phenomenal success of Xcent, Grand and Santa Fe increased volumes creating positive momentum. We expect to maintain this positive trend by strengthening our product portfolio and improving channel efficiencies,” Rakesh Srivastava, Senior VP, Sales and Marketing, Hyundai Motors India said.
In anticipation of a recovery, some car makers are also adding newer models, Bloomberg reported. Honda plans to introduce the Mobilio minivan in July and the revamped Jazz hatchback this financial year, and Tata Motors, the new Bolt hatchback and Zest compact sedan.
The outlook for 2015 is of a 10% growth in overall auto sales, according to Deepesh Rathore of Emerging Markets Automotive Advisors. “The downturn we have gone through is a minor blip on the long-term horizon. Capacity planning is for the long term and the growth story is pretty much intact," Bloomberg quoted him as saying.
Meanwhile the budget will be an immediate trigger that industry will be closely watching to see if the new Finance Minister announces any measures to boost consumer sentiment further.
"If the new government retains the excise duty cuts announced in the interim budget, it will boost consumer sentiment during the festive season," Abdul Majeed Auto Analyst & Partner with PricewaterhouseCoopers told the Economic Times.