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Auto companies see double digit sales surge in April

Auto companies see double digit sales surge in April Sales of passenger vehicles -- cars, vans and utility vehicles -- surged 11% in April, the first month of FY17, due to a low base effect and growth in dispatches of new products. All the three top passenger vehicle manufacturers -- Maruti Suzuki, Hyundai and Mahindra -- reported double digit increase in domestic wholesales to dealers. Others like Honda, Toyota and Tata continue to see double digit sales decline. The industry sales of 217,949 units in April 2015 were much lower than the average monthly sales of 232,473 units in FY16. While being higher compared to the volumes in corresponding month of 2015, April data shows a sequential decline for many players.

Country's largest car maker Maruti Suzuki reported a 16% jump in domestic sales for April. The company, which enjoys a 47% share in domestic passenger vehicle market, sold 117,045 units in domestic market last month against 100,709 units in April 2015. The increase is helped by sales of Brezza, S Cross and Baleno, all of which are new products. On a sequential basis, however, Maruti's sales have declined from 118,895 units in March 2016.

"We are happy to begin this fiscal on a positive note. Driving this robust growth for Maruti Suzuki are the new premium offerings Ciaz, Baleno, Vitara Brezza and S Cross. Some of these products are on wait list," said R S Kalsi, executive director (marketing and sales) at Maruti. At BSE, the company's stock closed at Rs 3,829.55, up 0.91% on a day when the BSE Sensex declined 0.66%.

Hyundai, the second largest player in the sector closed April just short of a 10% growth. The company's domestic sales grew 9.7% to 42,351 units. Rakesh Srivastava, senior vice president (sales and marketing) at Hyundai said, "In an industry seeing challenges on rural sales and diesel vehicle sales, Hyundai continued its growth momentum over last year with strong performance of the Creta, Elite i20 and Grand". Hyundai has seen a sequential increase of 2.8% in April.

Utility vehicle major M&M clocked a 16% growth in domestic sales during April, helped by new products like KUV100 and NuvoSport. The April volume of 22,655 units, however, is lower than the 26,885 units sold in March. Going forward we hope to maintain our growth momentum with our wide range of product portfolio as well as the new launches, said Pravin Shah, president and chief executive (automotive) at M&M. The company's stock closed at Rs 1,335.75, up 0.30% at BSE.

Apart from launching new products, players have resorted to high discounts to sustain growth momentum in sales. This year the industry is expected to improve the 7% growth rate it registered in FY16 helped by an improvement in demand from sub urban and rural demand due to an above normal rainfall after two consecutive deficit years. "Despite of regional challenges and rural pressures, the current growth is reflection of a sustained consumer confidence," said Amit Kaushik, country head at Jato Dynamics, an automotive consulting firm.

In spite of an overall growth, the industry is not without challenges. Japanese car maker Toyota continues to reel under the impact of Supreme Court ban on diesel vehicles about 2,000cc in the national capital region. Its sales have declined month after month as it has been unable to sell two popular models- Innova and Fortuner in the NCR market. Toyota's April sales are down 30%.

Another Japanese company Honda closed April with a steep decline of 17%. "The industry is facing big challenge because of sudden shift in consumer preferences from petrol. Moreover, the continuing ban on diesel has also impacted consumer sentiment. All these have impacted Honda's sales as there is a big mismatch in demand and availability of required variants," said Jnaneswar Sen, senior vice president (marketing and sales) at Honda.

Renault continued its strong performance and posted 210% growth, helped by its affordable hatchback Kwid. Ford has also seen a 32% increase in sales. Volkswagen and Nissan are also learnt to have seen a drop in sales though these companies have not announced the April data.