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The excise duty cut announced in the interim Budget last month has only had a marginal impacton the demand for cars, with the sector continuing to feel the heat of high fuel prices and finance costs, and tighter lending norms.
In February, the top eight of the 17 automobile companies, accounting for 92 per cent of the overall domestic sales, reported growth of 2.3 per cent at 201,445 units compared to the corresponding month last year.
In the 2014-15 interim Budget, the finance minister had cut the excise duty on compact hatchbacks, large sedans and utility vehicles four-six per cent. The additional five-10 per cent discounts offered by dealers failed to attract buyers. (TEPID SHOW: Automobile sales in February)
Owing to fresh dispatches of its new model Celerio, Maruti Suzuki, India's largest passenger vehicle company, reported a 1.8 per cent rise in domestic sales at 99,758 units in February, against 97,955 units in the year-ago period.
Combined sales in the segment in which Maruti Suzuki sells the M800, Alto, A-Star and WagonR dropped 9.6 per cent. The segment that saw the addition of Celerio and included Swift, Estilo and Ritz saw growth of 19.4 per cent. The Eeco-and-Omni segment recorded 22 per cent growth.
At 34,005, Hyundai sold just three units more than in the corresponding month last year. About a third of its domestic sales were accounted for by the newly launched Grand i10. Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai Motor India, said, "After the reduction in excise duty, enquiry inflow has increased...it is expected this will lead to the creation of positive momentum."
Utility vehicle major Mahindra & Mahindra (M&M), thought to benefit the most from the excise duty cut, saw the biggest disappointment. The company's utility vehicle and car sales fell to 19,308 units during the month, a fall of 17.5 per cent compared with 23,421 units in the year-ago period.
At six per cent, sports utility vehicles saw the steepest cut in excise duty in the interim Budget. M&M has a portfolio of six models that benefit from the cut; it also has the largest line-up of utility vehicles in India. The company also retails a hatchback (Verito Vibe) and a sedan (Verito) on which duties were slashed four per cent.
Pravin Shah, chief executive, automotive division, M&M, said, "The auto industry has received a much-needed boost in terms of an excise duty reduction and this has resulted in higher enquiries through the last week. The recently concluded Auto Expo has been a success, and this will only help generate demand. We are hopeful these positive initiatives will be the beginning of a gradual upswing for the auto industry, as we move into the next financial year."
Like M&M, Toyota Kirloskar, which didn't introduce any new model in the volume segment, witnessed a steep decline in sales in February. Total domestic sales dropped to 10,100 vehicles, a fall of 20.8 per cent compared with 12,756 sold in the corresponding month last year.
N Raja, senior vice-president (sales and marketing), Toyota Kirloskar, said "The excise duty cut was a welcome step taken by the government to revive sales. However, other factors such as high interest rates, the falling rupee and unstable fuel pricing still loom large in the market."
Honda Car India saw its City sedan surge to the top spot in its segment, beating Hyundai's Verna, the segment leader last year. For February, the company's domestic sales stood at 14,543 vehicles, with about half the sales coming from the fourth-generation City. The Amaze compact saw sales of 6,030 vehicles.
Jnaneswar Sen, senior vice-president (marketing & sales), Honda Car India, said, "We are happy to see the huge demand for the all-new Honda City, which has gained the leadership position in its segment from the first month. Deliveries for the petrol City have begun from February and both our car manufacturing plants are in operation; this will aid quick delivery of cars and cater to the strong demand from our customers."
