The auto industry appears close to be putting behind a horrible 2013, where sales fell for the first time in over a decade, as a bottoming-out economy and a excise duty-cut boost looks set to boost sales of vehicles ahead.
Auto sales in 2013 fell 10 percent, as a decade-low economic growth in the face of high inflation and interest rates took a toll on consumer spending.
But February sales data for various automakers points to a sign of turnaround.
Sales mixed but indicative of strength
In the four-wheeler space, leader Maruti Suzuki saw a marginal rise in domestic passenger-vehicle sales in February (as opposed to a 6.5 percent decline in January), helped by a strong debut by its semi-automatic Celerio.
The company's total sales were down 0.4 percent to 1.09 lakh units. This was despite a steep 19.5 percent fall in exports.
In other players, the beleaguered Tata Motors, which has made as much news for the superb performance of its overseas subsidiary Jaguar Land Rover as it has for the falling-off in sales in the domestic market, appears to be have put a stop to the local decline as of now.
Tata’s passenger vehicles snapped months of de-growth, rising 7 percent to 11,325 units but the gloom in the commercial-vehicles segment (down 49.3 percent to 23,990 units) continues unabated.
Mahindra & Mahindra, a top player in the utility vehicles and tractors space, continued its slowdown with total sales down 12 percent to 42,166 units but sales for company are showing signs of bottoming out, with sales of its commercial vehicles falling only 3 percent while tractor sales are up 23 percent year-to-date.
The management, however, has said the auto industry has received a boost from finance P Chidambaram’s excise-duty cut in the interim budget and that it has translated into higher enquiries since.
Chidambaram slashed excise duty ranging from 3 percent to 6 percent for various types of vehicles and automakers, reeling under the slowdown, were quick to announce pass-through of the entire quantum, which resulted in about a Rs 10,000-price cut for a car of about Rs 5 lakh.
Two wheeler sales also witnessing bottoming out
The two-wheeler space did not have to take it up on the chin as much as their four-wheeler counterparts but the slowdown there too appears to be bottoming out.
Sales for Bajaj Auto fell 7 percent in February but the overall auto industry’s negative growth appears to have bottomed out, Rajiv Bajaj told CNBC-TV18 in an interview.
Rival TVS Motor fared better with growth rising 7 percent to 1.77 lakh units in February, led by strong exports, and good scooter and three-wheeler sales.
TVS was helped by the launch of the Jupiter scooter.
Kotak optimistic of FY15 growth
But a fundamental weakness in demand due to high fuel and interest costs is likely to keep the macro scenario uncertain till the upcoming elections in May, analysts at Kotak Institutional Equities wrote in a research note. "Any meaningful recovery in automobile sales is likely to happen only post national elections in our view.”
Motorcycle and passenger vehicle sales may rise in the high single digit for FY15 led by pent-up demand and replacement demand, Kotak said.
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