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Business News/ Industry / Manufacturing/  Auto sales rise for fifth straight month
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Auto sales rise for fifth straight month

Sales signal recovery in consumer sentiment, helped by festive demand and apparent turnaround in economy

Automobile sales are recovering from a slump caused by slower economic growth, which fell below 5% in each of the previous two financial years, high fuel prices, and increased borrowing costs. Photo: Ramesh Pathania/MintPremium
Automobile sales are recovering from a slump caused by slower economic growth, which fell below 5% in each of the previous two financial years, high fuel prices, and increased borrowing costs. Photo: Ramesh Pathania/Mint

Mumbai: Car and two-wheeler makers reported a rise in sales for the fifth straight month in September, signalling a recovery in consumer sentiment, helped by festive demand and an apparent turnaround in the economy, according to monthly sales data released by automobile companies on Wednesday.

Car market leader Maruti SuzukI India Ltd topped the charts, selling 99,290 units in September, a 9.8% increase from a year ago. The growth was paced by an 18% rise in sales of compact cars that include the Swift and Celerio models. That more than offset a 13% drop in sales of the entry-level models including the WagonR and Alto.

“We expect the passenger vehicle market to remain buoyant in the forthcoming months and end the fiscal with a 7-8% growth," said Surjit Singh Arora, an analyst at Prabhudas Lilladhar Pvt. Ltd.

Arora said the growth will be helped by the launch of new models, the critical one being Maruti’s Ciaz sedan next week. Arora expects an incremental 4-5% growth in Maruti’s sales by volumes with the introduction of the Ciaz.

Automobile sales are recovering from a slump caused by slower economic growth, which fell below 5% in each of the previous two financial years, high fuel prices, and increased borrowing costs. After nine straight months of decline, sales posted a 3.1% increase in May.

The launch of new vehicles, a decline in fuel costs, and lower prices of non-food items are likely to help auto makers sustain the growth in the months ahead as the economy, which grew 5.7% in the June quarter—the most in two-and-a-half years—expands at a faster pace.

According to ZyFin Research, a macro-analytics firm focused on emerging markets, the vehicle purchase sentiment index moved up by 2 points to 17.5 in September compared with the previous month.

“With willingness to spend improving, passenger vehicle sales are expected to pick up over the next six months, the bulk of which should happen during the festive season," said Debopam Chaudhuri, chief economist at ZyFin Research.

Hyundai Motor India Ltd, the country’s second largest car maker by volume, said it sold 35,041 units in the domestic market in September, up 14% from a year earlier. New Hyundai models, including 8,902 units of the new Elite i20, helped sales, said Rakesh Srivastava, senior vice-president, sales and marketing.

“In this festive season, we are seeing a significant increase in first-time buyers and exchange buyers, which is very encouraging as it will accelerate the positive momentum already being experienced in the last few months," he said.

Mahindra and Mahindra Ltd, India’s largest utility vehicle and tractor maker, said it sold 19,893 passenger vehicles in September, compared with 18,916 units a year earlier, snapping an 18-month declining streak.

The new-generation Scorpio, which Mahindra launched last week, is expected to improve its overall sports utility vehicle sales.

In September, Mahindra reclaimed its third position in the pecking order from Honda Cars India Ltd. Honda sold 15,015 units, up 45% from a year ago.

“The automotive industry is turning the bend," Pravin Shah, chief executive of the automotive division at Mahindra, said in a statement.

Shah expects the months ahead to be better for the company and the industry on the back of new model launches, festivals and improving macro-economic factors. Lower fuel prices, among other factors, bode well for auto sales, he said.

Passenger vehicle sales at Tata Motors Ltd fell 7% to 11,931 units. While sales of passenger cars remained flat at 9,766 units, utility vehicles dropped 30% to 2,165 units. In a bid to shore up sales by volume in the passenger car market, Tata Motors launched the Zest in August. The company did not provide a model-wise break-up of sales.

ZyFin’s Chaudhuri cautioned that although the uptrend suggests consumer willingness to spend, the low score still indicates weariness on the part of buyers.

Riding on festivals like Navratra, which are considered auspicious for vehicle purchases, two-wheeler makers reported robust sales in September. Sales at market leader Hero MotoCorp Ltd jumped 28% to 640,000 units. Of these, 190,000 units were sold in the first six days of Navratra, an increase of 23% from a year ago.

Honda Motorcycle and Scooter India Pvt. Ltd, the second largest maker of motorbikes and scooters, said sales rose 34% to a record 420,622 units in September. Sales at TVS Motor Co. Ltd rose 29% to 217,447 units.

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Published: 01 Oct 2014, 11:49 PM IST
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