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Confidence returns to car market as sales rebound in May

Wednesday, 11 June 2014 - 7:30am IST | Place: Mumbai | Agency: dna

Domestic car sales grew 3.08% in May over the same month last year on account of better consumer sentiments and benefits from excise duty cuts.

The industry sold 148,577 passenger cars last month compared with 144,132 cars sold in May 2013. The overall passenger vehicle industry, including the sports utility vehicles and vans grew 2.76% as the industry sold 2,07,953 vehicles over 2,02,358 units, as per the data released by Society of Indian Automobile Manufacturers (SIAM) on Tuesday.

Car sales grew marginally in February 1.39%, however, it resumed the negative trend in March and April as wholesale dispatches fell 5.08% and 10.15%, respectively. Barring the February uptick, car sales have continued to decline since September last year.

Rising fuel costs, higher interest rates and low consumer sentiments impacted overall sales of cars and passenger vehicles for more almost two years now.

In some cases, sales grew in double digits. Domestic wholesale dispatches of Maruti Suzuki – the biggest carmaker in the country – registered a 16.4% year-on-year growth in May, while Hyundai Motor India sales grew 12.8%. Other players like Honda Cars India (HCI), Ford India also sales growth during the month on the back of new launches. HCI sales grew 17.8% yoy, in May, while Ford's wholesale dispatches rose 51.2%.

"Sentiments seem to have improved in the market. Footfalls are now converting into sales. Formation of a stable government at the Centre, coupled with reduction in cost of cars due to cut in excise duty, has brought back positive sentiments," SIAM director general Vishnu Mathur told reporters in New Delhi.

He said, however, it is too early to say that there is a turnaround in the market, and sought government support to boost the industry that has been facing a prolonged slump.

The government announced excise duty cut to 8% from 12% on small cars, scooters, motorcycles and commercial vehicles during the interim budget in February this year. For SUVs, the duties were slashed to 24% from 30%, while on large cars it was reduced to 24% from 27%.

Total two-wheeler sales during the month grew 16.3% to 14,02,830 units from 12,06,173 units in the same period of the previous year. Total sales of commercial vehicles in May 2014 were down 15.28% to 46,986 units against the year-ago period, SIAM said.

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