Date:03/12/2008 URL: http://www.thehindubusinessline.com/2008/12/03/stories/2008120351051100.htm

Back Vehicle makers bank on new models

But credit crunch could stand in way of sales growth.

BL Research Bureau

Throughout the period of the automobile slowdown (since early 2007), it is new launches, be it two- or four-wheelers, that have fuelled growth for automakers. As another year comes to a close, automakers continue to bank on this trend to shore up their sinking volumes.

A-Star holds the key

For Maruti, a 26.6 per cent fall in compact car (A2 segment) sales in November is the steepest decline since March 2008, where it took the first hit, with a 11 per cent drop. The company is now looking up to the A-Star to trigger a revival in volumes in this segment.

Maruti has benefited from new launches in the past in its sales of SX4 and Dzire, launched during the slowdown. For this reason, compact car sales numbers over the next few months assume importance as sales of A-Star may yet hold promise for volumes.

UVs no different

Declining Scorpio sales have affected utility vehicles maker Mahindra and Mahindra too. For November, the company’s UV sales were 40 per cent lower than a year ago. In fact, for the April-November 2008 period the company’s utility vehicles volumes have grown only by about 2 per cent. For M&M, The launch of the Xylo, a new MUV placed between the Bolero and the Scorpio, is expected to revive volumes.

Two-wheelers

After domestic motorcycle sales fell by 50 per in October, Bajaj Auto continued to witness a high 37 per cent year-on-year decline in motor cycle sales in November. Bajaj plans to arrest this decline through an intense new product initiative under which it will launch a new motorcycle every 6 months beginning January 2009.

TVS plans to launch a four-stroke three-wheeler and a Scooty before the end of the year and two motorcycles next year to boost demand.

However, with so many launches on the anvil and the consumer still strapped for credit, not every player may be able to convert the launches into better sales growth.