Industry says fiscal stimulus must continue
Automobile sales for December 2009 stood at 1,000,500 units, an increase of 67.5 per cent against the low base of 597,622 units in December 2008. This growth is the highest so far in 2009–10. The second highest growth of 46 per cent was witnessed in November.
“A combination of factors like the three fiscal stimulus packages, low interest rates on vehicle financing made possible by PSU banks, cash infusion from the sixth pay commission and new models from manufacturers have helped December sales to rise,” says Pawan Goenka, President of the Society of Indian Automobile Manufacturers and President of Mahindra & Mahindra. He was addressing the media today at the ongoing Auto Expo 2010.
The 68 per cent rise in December 2009 sales was made possible by the sustained growth in cars and utility vehicles (50 per cent), continued growth in medium & heavy commercial vehicles on a low base last year (248 per cent), and in two-wheeler sales (67 per cent) last month.
| TRACING REVIVAL | |||
| Category |
December | ||
| 2008 | 2009 | % change | |
| Two-wheelers | 461,302 | 767,796 | 66.60 |
| Three-wheelers | 19,048 | 34,993 | 83.67 |
| Passenger vehicles | 99,352 | 149,097 | 49.94 |
| Commercial vehicles | 17,920 | 48,614 | 171.63 |
| Total | 597,622 | 1,000,500 | 67.52 |
| Source: SIAM | |||
Sales of passenger vehicles in December grew by 50 per cent, with the industry selling 149,097 units. November sales growth were the highest, at 67 per cent. “Despite the maintenance shutdowns initiated by car manufacturers, despatch on a wholesale basis (to dealers) was high. Broadly, we expect the sales trend to continue for the new year,” said Shashank Srivastava, chief general manager (marketing) of Maruti Suzuki.
Industry executives are cautious on maintaining sustained growth. “Sales (growth) from January onwards would moderate, since the first quarter of 2009 was a high base,” says Goenka. Other factors like rising interest rates, withdrawal of the government’s stimulus package, which could force manufacturers to increase prices, introduction of the new vehicle tailpipe emission norms in April and newer safety standards forcing manufacturers to adopt new technologies in cars, would increase prices of vehicles. “ In addition to these negative factors, prices of commodities are set to rise by 500 basis points, making vehicles more expensive,” says Vaishali Jajoo.
Goenka said the stimulus packages introduced by the government last year must continue. “Undoubtedly (otherwise) sales would slow down, because other factors like rising commodity prices in the third quarter and rising interest rates would once again dampen sentiments, leading to a slowdown.”
Sales of large commercial vehicles, termed medium and large trucks and buses, rose for the fifth consecutive month. The December rise was an impressive 248 per cent, in which the industry sold a record 24,037 units. This is the highest growth posted by the CV industry for this year. The fourth quarter of 2009 was a low base in sales of large Cvs, when it dipped between 50 and 70 per cent. Industry executives say the high growth will continue even in the first quarter of 2010, on the back of buying before the new emission norms get effective in April. Total sales of CVs, (including light CVs) was 48,614 units.
Sales of three-wheelers, on the back of good demand for passenger carriers, grew by 83.7 per cent, at 34,993 units.
Two-wheeler sales for December, led by Hero Honda and a resurgent Bajaj Auto, rose by 67 per cent, enabling manufacturers to sell 767,796 units.
