Discounts save the day for car makers

Higher discounts and good demand for diesel vehicles helped most car makers report higher domestic in sales in December, but Maruti Suzuki India continued its downhill drive for the seventh straight month.

At 92,161 vehicles, Maruti’s sales were down 7% month on month and 13.4% year on year, though exports rose a whopping 50.5% on year to 14,686 vehicles.

The company’s facilities were closed for six days during the month for bi-annual maintenance, which partly accounts for lower sales during the month.

According to Aditya Makharia and Ritesh Gupta of JP Morgan, Maruti’s sales performance over November mirrored a fall of about 8% in the broader market. “We reiterate that Maruti will continue to face headwinds given sluggish demand, rising competition and an appreciating Japanese yen,” the analysts said in a note to clients on Monday.

Since July this year, car makers have been grappling with a demand slowdown for new vehicles on soaring fuel costs, expensive loans and inflationary pressures, which have made customers defer purchases. Though high discounts helped in December, the market remains sluggish.

Among the other players, Ford India’s sales were up 39% to 5,979 vehicles, General Motor India’s up 7% at 9,039 units and Nissan Motor India’s up 44% at 1,596 vehicles. Hyundai India reported a 13% increase in domestic sales to 29,516 vehicles, while Tata Motors saw dispatches rise 47% at 28,916 vehicles, mainly on account of lower base.

Two-wheeler sales, which had so far remained immune to a slowdown in the Indian auto market, showed signs of moderation in December.

While Hero MotoCorp logged growth, the growth clip was slower. The company sold 540,276 units, up 7.8% year on year.

On its part, Bajaj Auto admitted that its 2011-12 target of 4.5 million vehicle sales may fall short by one lakh unit. The company’s total vehicle sales rose 10% to 305,690 units in December —- motorcycle sales up 8% at 263,699 units and three-wheeler sales up 27% at 41,991 units.

At TVS Motor, total vehicle sales fell 3% to 167,905 vehicles as motorcycle sales fell 8% to 56,662 and three-wheeler sales slumped 27% to 2,523 vehicles.

Honda Motorcycle & Scooter India reported 36% growth, at 191,584 units, largely led by scooters.