Auto-makers ride high on marketing initiatives, inventory push; Crisil pegs 7 per cent car sales growth for the current year.
Increased marketing initiatives, coupled with inventory push, have propelled the September sales of domestic automobile companies, which expect a higher demand in the upcoming festival season.
Automobile manufacturers like Hyundai, Mahindra & Mahindra (M&M) and Hero Honda posted impressive growth in wholesale despatches to dealers as they tried to push inventory for the Diwali and Navaratri festivals.
Maruti Suzuki, the country’s biggest car-maker, however, posted dismal growth of 2.5 per cent for the month, selling 64,682 units in the domestic market. The company’s core segment, comprising Alto, Wagon R, Zen Estilo and Swift, reported a fall in sales of 1.3 per cent, whereas the sedan segment posted sales growth of 51 per cent.
Boosted by a healthy demand for its i10 model, Hyundai Motor India (HMIL) reported 23 per cent growth for September, selling 22,311 units in the domestic market.
Arvind Saxena, senior vice-president, marketing and sales, HMIL, said, “With the onset of the festive season, we are optimistic that we will be able to keep the momentum going in the coming months. To meet the demand for i10 in domestic and overseas markets, we have started third-shift operations at our second plant.”
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Utility vehicle-maker Mahindra & Mahindra also reported an upswing in sales, regiserting 31 per cent growth in September by selling more than 16,000 units of Scorpio, Bolero and other models. Demand for Logan, a product jointly manufactured by Mahindra and Renault, however, faltered as sales slipped by nearly 20 per cent compared with those in the same period last year.
S Ramnath, an auto analyst at SSKI Securities, said, “Despite the ‘shraadh’ month, when sales usually show a decline, we have seen a good uptrend. This is a clear sign that manufacturers are pushing inventory to the dealers for the upcoming festive period.”
Tata Motors, the country’s third biggest car-maker, posted a decline of almost 9 per cent in domestic sales as a ramp-up in production of its new Indica Vista marred growth in September. The company sold 16,586 units of passenger vehicles during the month as against 18,216 units in the same period last year.
General Motors posted a decline of 10 per cent for the month under review, selling 5,154 units as against 5,751 units in the year-ago period. Skoda Auto sold 1,213 units, recording growth of 34 per cent against sales of 900 units in September 2007. Sales were generally helped by the Fabia hatchback.
Honda Siel Cars India also saw a 45 per cent drop in sales at 3,104 units compared with 5,674 units, mainly owing to a halt in production of the outgoing City model, which was replaced by a new model that was launched in the last week of September.
In the two-wheeler segment, market leader Hero Honda extended its lead over rival Bajaj Auto, recording a 22 per cent rise in sales last month. The company sold more than 3.85 lakh units compared with 3.14 lakh units in the corresponding month last year.
Pune-based Bajaj Auto sold 2.18 lakh units in September, reported 6 per cent sales growth. The company sees a surge in sales with the launch of its new 125cc bikes, which are targeted at the festive demand. The company launched its second offering in the executive (125cc) segment a week ago and will launch one more bike before December.
Chennai-based TVS Motors, meanwhile, reported a gain of 16 per cent in the domestic market, selling 1.19 lakh units last month as against 1.02 lakh units in the same month last year. The company has been able to capitalise on its wholesome product portfolio and has witnessed a quantum increase in sales with notable contribution across all models, said a company release.
A Crisil Research report expects the domestic car industry to register 6-7 per cent growth in the current year. Despite the cash crunch, rising income levels in rural areas will push growth in the two-wheeler segment, said the report, forecasting domestic two-wheeler sales to grow by 7-8 per cent in 2008-09 as against a 9 per cent decline in 2007-08.
The impact of a rise in raw material prices on the cost of sales in the overall automotive chain is expected to be around 7 per cent in 2008-09. Margins of leading players are expected to remain under pressure in 2008-09 despite original equipment manufacturers (OEMs) absorbing only a part of the surge in costs and passing on the balance to their customers, added the report.
Crisil Research expects the single-digit growth rate to continue for automobile segments in 2009-10. Sachin Mathur, head, Crisil Research, said, “A moderate improvement in the outlook for the automobile sector in 2009-10 hinges on softening of input costs and fuel prices, financing rates remaining stable and continuation of the industrial investment cycle.”