Car sales set to grow 25%

As the first nine months of the current financial year draw to a close, leading car makers are busy scaling up their sales projections. Most of them are now looking at ending the year with a 25 per cent rise in sales.

At the beginning of the year, the Society of Indian Automobile Manufacturers (Siam) said it expected car sales to grow 10 per cent during the year.

By the middle of the year, as the feel-good factor seeped in and sales started picking up, carmakers said they were looking at a 16-17 per cent growth. "But after December, it definitely looks like we will cruise through the year at much more than 20 per cent, if not 25 per cent," says a Siam executive.

According to a senior executive of the country's top car maker, Maruti Udyog, domestic sales had been growing at 23-24 per cent year-on-year till December 2003, and there was no reason why the trend should not continue.

"We expect the dream run to continue in January-March. Normally, the last quarter fetches high volumes, almost 1.5 times of average quarter sales. We will be able to sell at least 120,000 cars in the domestic market during the period," he says.

In 2002-03, 630,000 cars were sold in the domestic market, which was 7 per cent higher than the 560,000 sold in the previous year. If the industry grows 25 per cent, around 800,000 cars will be sold this year.

"Our assessment shows that the industry should close the financial year with a growth rate of 24 per cent," says Anand Mohan Gupta, vice-president (marketing), Fiat India. By December, the industry will have sold around 600,000 cars "" by and large what it sold in the whole of last year. Gupta is expecting at least 25 per cent of last year's volume to be sold in the last quarter.

Some, like Hyundai Motor India President BVR Subbu, however, say if growth is that high, it is only because the entry-level Maruti-800 has notched up huge numbers. "Knock off the Maruti-800 numbers, and you get a realistic growth rate of around 15 per cent," he says.

A cheaper Maruti-800, thanks to excise relief in the last Budget, has created new markets and new consumers.

"There has also been a massive growth in sales of C-segment cars (Rs 3-5 lakh). C-segment volumes are expected to touch 100,000 cars this year," says Gupta. He is certain that the growth will continue in 2004-05.