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Passenger vehicles surge 35% in May


New products and increased consumer confidence led to record growth in passenger vehicle sales in May. According to the Society of Indian Automobile Manufacturers (Siam), the passenger vehicle industry registered 35 per cent growth in May, the highest ever, at 190,575 units against 141,145 units in May last year. The overall automobile industry recorded a jump of 30 per cent last month at 1,208,851 units, as compared to 929,917 units last May.


However, in absolute terms, the highest ever monthly passenger vehicle sales had happened this March, at 199,109 units.

“Last month's figures were the best-ever sales for the month of May in almost all categories and has come on the back of strong fundamentals of the economy and stable interest rates, along with several new launches in the last few months,” said Vishnu Mathur, director general, Siam.

He said new models and their aggressive pricing had given Indian consumers wider choice and so, passenger vehicle sales continued to be buoyant even in May, traditionally a lean month.

According to Siam, sales of Maruti Suzuki India went up by 27.2 per cent at 90,041 units, while Hyundai Motor India registered growth of 15.5 per cent at 27,151 units. Sales of Tata Motor surged by 33.2 per cent to 25,186 units in May. Ford India and GM India had growth of 272 per cent and 61 per cent, respectively, with their new Figo and Beat models.

Break from cycle
“We are trying to beat the usual cycle of low-selling months in the period following the Union budget and before the advent of the monsoon, with renewal of buying among city people as more and more companies are now on the hiring mode and, therefore, higher disposable income among urban customers,” said Mayank Pareek, executive officer (marketing and sales), Maruti Suzuki India.

Even two-wheelers continued the growth momentum, with overall sales going up by 28.7 per cent in May at 936,555 units vis-à-vis 727,933 units in the corresponding month last year. Hero Honda Motors posted a jump of 13.7 per cent at 425,058 units, while sales of Bajaj Auto went up by 68 per cent to 191,726 units. Those of Chennai-based TVS Motors grew by 27.2 per cent to 136,621 units.

High demand for made-in-India two-wheelers led to the highest ever exports from India in May, at 179,130 units as compared to 119,749 units in May 2009, growth of 49.6 per cent.

The motorcycle segment was the largest contributor to exports last month and registered growth of 49.1 per cent at 116,832 units, followed by exports of passenger cars that went up by 10.2 per cent in May to 32,649 units.

Expected to moderate
Industry experts and analysts, however, say this kind of growth is not sustainable and there would be some moderation in demand in days to come if interest rates hardened. “While the overall corporate profitability has resulted in higher consumer confidence, this levels of growth rate is not sustainable over the long run and we would see the passenger vehicle industry stabilising at 15-18 per cent as the high base effect of last year comes into play,” said Rakesh Batra, national head (automotive practice), Ernst & Young.

“While capacity constraints at OEMs (original equipment makers) will restrict the growth, we are cautiously optimistic about future demand, as high inflation may lead to increase in interest rates and the huge payouts for 3G auction may suck liquidity from the system,” Mathur added.