Dec brings hope for auto sector, likely to see flat 2012

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Dec brings hope for auto sector, likely to see flat 2012

There's no question about it. The year 2011 has been a tough one for the auto industry. However, the last month of the year, saw some players get a wee bit of traction. CNBC-TV18's Swati Khandelwal Jain reports

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There's no question about it. The year 2011 has been a tough one for the auto industry. However, the last month of the year, saw some players get a wee bit of traction. CNBC-TV18's Swati Khandelwal Jain reports

December is typically a slow month for the auto sector and December 2011 has been no exception. But despite its historical sluggishness, the month has set the stage for what some hope will be a recovery.

Maruti Suzuki, the leader in the passenger vehicle space, recovered from crippling strikes and falling demand.

Sales in December fell just 7%...that's a much smaller dip than the 21% fall in September, the 53% plunge in October, or the 19% drop in November.

But the other car-makers, who have not taken such a brutal hit through 2011, have had a relatively smoother ride.

M&M saw overall sales jump 26% on a year-on-year basis. "We are hopeful that interest rates have peaked and in 2012 we will see some softening of interest rates and that can only help the industry. Also in the commodity price front, we are hopeful there will be some moderation," Vivek Nayer of M&M told CNBC-TV18.

Tata Motors also found itself on a firm footing...sales rose 22% in December from year-ago levels.

However, between March and December, passenger car sales are 3% lower than year-ago levels. But two-wheeler manufacturers have slipped into a skid in the last month of 2011.

Bajaj Auto's December sales came in 18% lower than in November - that's the steepest month-on-month drop since July. However, on a year-on-year basis, total December sales were 10% higher.

The company is cautious about 2012, but is banking on exports to keep growth momentum going.

Kevin D'sa, President - Finance, Bajaj Auto said, "We still believe a 20% value growth is possible, 20% EBITDA doable. In the in terms of volume growth, I would say, 25% would be tough; 20% also would be tough but the value is comfortable on the 20% mark.

TVS Motor Company is not doing any better. It has reported a marginal fall in total vehicle sales in December.

But the one bright spot in the two-wheeler segment was Hero Motocorp that saw a 7.8% jump in total sales at 5.4 lakh units.

On the whole the auto industry is worried that rising input costs and high interest rates will keep demand low, and put pressure on sales-at least in the short term-and this could mean flat growth in the coming year.