However, commercial vehicle sales fell and passenger vehicle sales grew only 8%
Auto sales for the month of June grew by 14.26 per cent over the same month a year earlier, according to a report released by the Society of Indian Automobile Manufacturers (Siam).
The growth posted in May was 8.86 per cent, suggesting an acceleration in sales coming mainly from motorcycles, light commercial vehicles (LCV) and passenger cars. “The sales growth in June is impressive if one has to factor the slowdown in the overall economy and the negative sentiments currently prevailing,” says Vaishali Jajoo, an analyst at Mumbai-based Angel Broking.
Sales of passenger vehicles, comprising cars and utility vehicles on a year to year basis, grew by 8.29 per cent in June, motorcycles grew by 16.23 per cent and LCVs grew by about 10 per cent. Only sales of medium and heavy commercial vehicles (M&HCV) dipped by 31 per cent.
| TOP GEAR Sales for the month of June 2009 | |||
| Segment | June 2008 | June 2009 | % change |
| Passenger vehicles | 129,536 | 140,243 | 8.29 |
| Two-wheelers | 601,941 | 706,937 | 17.44 |
| Three-wheelers | 29,804 | 33,727 | 13.17 |
| Commercial vehicles | 40,324 | 36,193 | -12.51 |
| Total | 801,605 | 917,100 | 14.26 |
| Source: SIAM | |||
Jajoo says on a month on month basis (growth trend witnessed between May and June this year), positive signs have been witnessed in the M&HCV segment. “This segment, which is dependent on GDP growth, grew 28.55 per cent, selling 15,659 units compared to May this year, which suggests a demand pick up.” However, R Seshasayee, managing director, Ashok Leyland, expects real demand for commercial vehicles to set in the second half of the year.
Auto sales for the first quarter ending June grew by 11.24 per cent, in which the industry sold 2.7 million vehicles. Last year, the growth for the same quarter was about 8 per cent. “On the back of the three stimulus packages announced since December 2008, new launches of vehicles, stimuli like the 6th Pay Commission, which made people buy cars, and teaser interest rates on vehicle loans announced by leading PSU banks, the auto industry grew in double digits,” says Dilip Chenoy, director-general of Siam.
However, Chenoy is cautious on the forecast for the remaining three quarters for the financial year ending March 2010. “Sales recovery for the coming months depends largely on the monsoons which could work in both ways, especially in rural areas, where sales could either rise or fall. Commodity prices, real GDP growth, interest rates, and liquidity will also determine sales. Our growth projections for the whole year, which was based on the stimulus packages, among other factors, remain the same. We have not changed the outlook.”
Sales for passenger vehicles for the April–June quarter grew by about 4 per cent over what was witnessed for the same period last year. Last year, car sales grew by 15 per cent for the same period. Industry executives say one reason for this sales dip comes from poor performance of the utility vehicle segment, which posted a negative growth of 7 per cent. “The excise duty of 20 per cent, plus the additional duty of about Rs 15,000, is hampering sales of utility vehicles, which is largely used by the common man,” says an industry executive.
While sales of M&HCVs dipped by about 36 per cent, sales of three-wheelers grew by 7 per cent for the April-June quarter. The three-wheeler segment grew on the back of robust demand for passenger goods’ three-wheelers from the rural market for public transportation.
Analysts say the increased allocations in the Union Budget for the rural economy through NREGS, overall growth in GDP growth, spending from the JNNURM projects, good monsoon in the coming months, and repossession norms, which should be announced shortly, will help the auto industry to post continued growth.
