Car sales soar on rush to evade diesel duty

Sales of cars grew strongly in February as customers rushed to make their purchases ahead of Budget day.

The finance minister is expected to propose a hike in excise duty on diesel vehicles on March 16 — an increase that carmakers have already indicated they will pass on to consumers.

Automakers with strong diesel portfolios — Maruti Suzuki, Hyundai Motors and Tata Motors — reported strong numbers.

Domestic sales of Maruti Suzuki, which sells every second car in the country, rose 6% year on year at 107,653 units. Sales of Swift and Swift Dzire models rose 31% and 58%, respectively.

“Maruti has surprised yet again. Sales of the new Swift and new Dzire have helped in posting strong numbers. The company is also fast gearing up to meet the increasing demand for its diesel vehicles,” said Surjit Singh Arora, analyst, Prabhudas Liladher.

Meanwhile, Hyundai Motor India, the second-largest carmaker in the country, logged its highest ever domestic sales in a month at 36,805 units, up 12.8% year on year.

Mahindra & Mahindra’s domestic sales stood at 40,461 units, up a whopping 27%.

Tata Motors sold 36,536 units (34,832 Tata and 1,704 Fiat cars), up 8% year on year. Sales of Nano grew 12%, while those of the Sumo/ Safari/ Aria/ Venture range jumped 42%.

Honda Siel, which has been struggling due to falling sales, saw a growth of 83% in February, backed by strong demand for the new City. The company resumed normal production, which was affected due to floods in Thailand.

Toyota Kirloskar Motor, too, registered a growth of 79% at 16,659 units in February.

However, companies like Volkswagen India and General Motors India saw some pressure on sales — Volkswagen sold 7.8% fewer vehicles at 6,527 units, while General Motors saw sales drop 4.3% to 8,901 units compared with February last year.

Experts expect car sales to hold firm this month, too, riding on the diesel rush.

“Diesel cars are being preferred over petrol variants as currently diesel is 36% cheaper than petrol. Consumers are anticipating an additional duty levy on diesel cars. This is pushing consumers to advance their purchases. We expect growth to remain at a similar level in March 2012,” said Sridhar Chandrasekhar, head, Crisil Research.

Two-wheelers, too, managed to post strong numbers despite rising inventory with the dealers. Hero MotoCorp, the world’s largest two-wheeler manufacturer, dispatched 523,465 units, showing a growth of 11%. Among others, Honda Motorcycle & Scooter India reported 41.30% growth at 206,043 units, while Yamaha Motor registered 23% growth and Suzuki Motor Corporation saw a 30% increase.