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Car sales gallop

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Fears of an imminent price rise, production spillovers owing to spare parts shortages plus a low base effect saw sales of the country's major car makers grow a record 63 per cent in November.

Data of November's sales surge — in keeping with a general positive trend for the first eight months of this fiscal year — comes a day after the country's GDP growth numbers surprised market experts.

The eight car makers account for over 90 per cent of the country's total domestic car sales. They sold 154,367 in November this year against 94,295 in the same month .

The growth mainly comes on a very low base of car sales in November last year when the downturn in the industry, owing to the global meltdown, caused most companies to declare a double-digit fall in sales.

The auto industry has, however, consistently managed to report healthy growth figures well before the start of the festive period. The industry grew by 16 per cent to 1,052,161 units in the April-October period.

Market experts, however, say the fear of a possible withdrawal of the government's stimulus package — a combination of excise cuts and improved depreciation benefits — and general fears of manufacturers raising prices on the back of rising input costs also accelerated demand last month.

"The growth could be unreal considering the low base of November. What one should see are the figures of November 2007 with 2009," says R C Bhargava, chairman of Maruti Suzuki, India's largest car-makers.

With exceptions, most car makers saw higher sales in November 2009 over the same month in 2007.

"However, the obvious expectation that excise duty will go up from 8 per cent in the Budget as the government withdraws the stimulus package and that car prices will go up have also prompted many consumers to buy now," he adds.

A shortage of auto parts in the previous two months, owing to component manufacturers' inability to adjust to a sudden upswing in demand, left manufacturers unable to ramp up capacity in sync with demand, leading to long waiting lists. This demand also spilled over into November.

Maruti Suzuki reported its best monthly tally for the year with domestic demand growing 61 per cent to 76,359 units against 47,704 units reported during the same month last year.

Its new launches like Ritz, A-Star and SX4 saw demand growth, while earlier models such as Swift and Swift DZire also rode the demand surge. Hatchbacks, which account for 88 per cent of the company's total sales, grew 63 per cent to 67,365 units.

Maruti's exports also more than than doubled to 11,448 units against 5,007 units in the same month a year back.

Korean automotive brand Hyundai Motors India (HMIL) was made to start the third shift at its plant in Chennai to satisfy a surge in demand for hatchbacks like Santro, i10 and i20. Domestic sales grew to almost 93 per cent to 28,162 units compared to 14,605 units.

Arvind Saxena, senior vice- president (marketing and sales), HMIL, said, “The overall economic scenario has been positive and this has translated into more footfalls in the showroom and higher automobile sales as indicated by this month’s figures. We hope the economy will continue on a growth trajectory as it will help the Indian automotive industry to maintain a double-digit growth figure.”

Tata Motors posted its highest growth for the year with sales of 20,706 an increase of 44 per cent as compared to 14,327 last year. The company dispatched 3406 Nano's during the month while stating in a release that it is in the process of ramping up production for the ultra low cost car.

Mumbai-based utility vehicle major Mahindra & Mahindra (M&M) saw domestic demand double from 7,523 units in November last year.

Senior company officials said demand for Xylo (a multipurpose vehicle) in the urban market and the new Scorpio and Bolero in the semi-rural market continued to report favourable sales.

US auto major General Motors posted its highest monthly total since its inception, with the company's flagship model Spark reporting sales of 4,202 units while its newly launched premium sedan Cruze sold 518 units for the same month.

Only two companies bucked the trend of generous growth rates. Honda Siel Cars India (HSCI) reported a marginal increase of 2 per cent to 5125 units compared to 5025 units in the same month last year. The company had launched the new City in the same month which had driven the sales numbers.

Mahindra Renault, meanwhile, reported its worst ever sales of just 279 units of the Logan sedan for the month against 300 units in November last year, reflecting troubles in the joint venture that Renault Nissan CEO Carlos Ghosn had hinted at earlier this year.