Rays of recovery - Indian auto sales grows in May
BS reported that robust growth in two and three wheelers masked the glaring glitches in automobile sales last month
and pulled it up to a respectable 8.86%. The glitches were most pronounced in commercial vehicles, whose sales
plummeted by nearly 15%.
According to the Society of Indian Automobile Manufacturer, sales of passenger vehicles mainly cars and utility
vehicles, dipped by just under 1%.
From February to April 2009, vehicle sales grew in double digits. In April, passenger vehicles had grown by 5%.
According to Mr Dilip Chenoy director general of SIAM, the May decline is primarily due to the dip in sales of
utility vehicles, which fell 29%, while sales of small cars grew by an impressive 11%. The small car segment
contributes around 70% to the total number of cars sold.
Analysts said the other reasons for the drop in passenger vehicle sales in May is linked to the diminishing appeal
of excise duty cuts announced in the stimulus package in January 2009. Excise duty cuts helped car manufacturers
to lower prices of cars. Industry executives said in addition to PSU banks lowering interest rates for car loans,
more needs to be done. Like rationalizing, the excise duty on utility vehicles, which currently stand around 25%.
For small cars, it's 8%.
However, motorcycle sales for May grew by 12.34%, a continuation of the double digit growth seen since February.
The sales for scooters grew by 11.5% on the back of strong demand in urban markets. According to industry
executives, the average waiting period for automatic scooters is around 20 days.
Moreover, sales of three wheelers grew by 5.27% in May. This growth comes primarily from the passenger vehicle
segment, which grew by 15.3%.
Mr R Seshasayee MD of Ashok Leyland said "Apart from the economic recovery we expect in the H2 of 2009, what the
industry needs is investments in the country's infrastructure, which directly creates demand for commercial
vehicles."
According to industry executives, the 15,000 bus order under the JNNURM project is yet to be finalized, orders for
around 7,000 buses have been placed so far and the remaining order is yet to be realized. Executives said long
term demand for buses will come only when the new government puts in place a comprehensive public transportation
policy.
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