Date:04/04/2008 URL: http://www.thehindubusinessline.com/2008/04/04/stories/2008040450891500.htm

Back Surprises in vehicle sales numbers

No impact on compact cars from excise duty cut

BL Research Bureau

March vehicle sales numbers for Maruti Suzuki have been disappointing. Although growth had moderated since December 2007, for the first time in the last twelve months, the company recorded a decline of 2.1 per cent in its sales numbers for March.

The compact segment (Alto, Wagon R, Estilo and Swift) was the worst hit, showing a 11 per cent fall in sales on a year-on-year basis.

This decline was unexpected as the excise duty cuts for the small car, announced in the Budget, were expected to have a positive impact on the sales.

Similarly, the sales of Indica, another small car, also failed to react positively.

Indica sales, in keeping with past trends, clocked a year-on-year decline of 8 per cent. Increased competition in the compact car segment may have dented sales.

Medium and heavy trucks of the Tata Motors have posted 14 per cent year-on-year growth, as the duty cut was announced for truck segment too.

The company’s MHCV segment grew by 17 per cent year-on-year in March, recording its highest growth in the past 13 months, pointing to a possible recovery in MHCV sales.

On the other hand, tractor sales have benefited from the Budget largesse, with the tractor sales of Mahindra and Mahindra growing 8 per cent year-on-year in March. Though it looks like the MHCV and tractor sales have witnessed a turnaround, sustained trends in the next few months will hold the key.

Two-wheelers

Sales growth of Hero Honda was back in the positive territory, recording a 15 per cent year-on-year growth in March, after three months of de-growth. No respite for Bajaj and TVS, which continued to languish — the former, due to lower than expected performance from XCD and fewer choices in the 125cc segment and the latter, due to delay in product launches and a patent tussle.

Availability of cheaper credit will, however, continue to influence sales in the next few months, never mind the duty cuts.

After clocking two-digit growth in the eight months beginning April, the number of vehicles sold grew only by 9.7 per cent year-on-year in December, 4.2 per cent in January and by 1.3 per cent in February.

March has been the worst month for the company, where for the first time, it has shown a de-growth of 2.1 per cent.

The sales in the compact segment (Alto, Wagon R, Estilo and Swift), which reduced by 11 per cent year-on-year, was a surprise.