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Car sales stay in slow lane despite excise duty cuts

Monday, 3 March 2014 - 6:00am IST | Place: Mumbai | Agency: DNA

The reduction in prices of cars last month, post the cut in excise duty announced in the interim budget, has not helped much in increasing the volumes for the carmakers.

Companies like Maruti Suzuki, Hyundai Motor saw a marginal increase in sales during February, while sales of most others continued to skid.

In order to relieve the industry from slowdown, the finance minister last month reduced the excise duty on small cars by 4% and sedans and on sports utility vehicles by 6%.

Maruti Suzuki – the biggest carmaker -- sold 99,758 units in February in the domestic market, recording an increase of 1.80% from 97,955 units sold in February 2013. Sales in passenger cars segment, which comprises brands such as M800, Alto, A-Star, WagonR, Swift, Estilo, Ritz, Dzire, SX4 and Kizashi, inched higher 0.90% at 84,595 units from 83,865 units in February 2013.

Domestic sales of Hyundai Motor India did not change much in February as it sold 34,005 units during the month.

A 6% reduction of duties on sports utility vehicles did not really help in boosting the sales for the segment. Sales of the biggest utility vehicle manufacturer – Mahindra & Mahindra (M&M) -- dropped 18% in February compared with the same month last year.

The companies, however, are hopeful of pick-up in sales in the coming sales with increasing amount of enquiries due to price reduction.

Pravin Shah, chief executive, automotive division, M&M, said, "The auto industry has received the much needed boost in terms of an excise duty reduction and this has resulted in higher enquiries over the last one week."

Toyota Kirloskar Motor, which sells vehicles such as Innova and Fortuner, saw a decline in sales to 10,100 units in February from 12,756 units last year.

N Raja, senior vice-president, sales and marketing, said, "The excise duty cut was a welcome step taken by the government to revive sales. However, other factors such as high interest rates, falling rupee and unstable fuel pricing still loom large on the market."

Some carmakers saw their sales increasing on the back of new launches. Tata Motors's passenger vehicle sales grew 6.70% at 11,325 units in February. Ford India's domestic sales grew 51%, while Honda Cars India continued its strong performance backed by recent launches such as the new City and strong momentum for Amaze. The company's sales grew 123% in February on year-on-year basis.




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