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Car sales turn around as new govt brings hope

The new government seems to have spurred recovery in the automobile industry, with eight of the country's leading passenger vehicle makers on Monday reporting sales growth of 7.4 per cent in May.

These automobile manufacturers sold 190,193 vehicles in May, compared with 177,168 in the same month a year ago. According to data available with the Society of Indian Automobile Manufacturers (SIAM), domestic passenger vehicle sales had in April declined 9.50 per cent to 188,541 on a year-on-year basis.

Abdul Majeed, partner & leader for automotive practice at PricewaterhouseCoopers, said: "There are signs of revival in the domestic market. After two years, it seems, the decline in automobile sales has bottomed out. With a new government in place, sentiment is good. Things can only look up now, provided the excise duty cut stays in place." (TWO-WHEELER SALES WATCH)

Majeed said passenger vehicle sales could grow five per cent in 2014-15 and a double-digit rate might return the next year.

The country's largest carmaker, Maruti Suzuki, whose sales had declined 12.6 per cent in April, posted 16.4 per cent growth to 90,560 units in May. Sales of small cars Alto and WagonR dropped 7.5 per cent to 29,068 but those of premium models like Swift, Ritz and Celerio increased 53.9 per cent to 26,394. The number of units of the DZire sold in the month rose 9.8 per cent to 18,953, while 5,253 units (22 per cent more) of utility vehicles Ertiga and Grand Vitara were sold.

Sales of the Eeco and Omni vans grew 50.2 per cent to 10,771.

New launches helped boost numbers for Hyundai, Honda, Ford and Toyota. For Hyundai, sales went up by 12.8 per cent to 36,205 in the month.

Rakesh Srivastava, Hyundai's senior vice-president for sales & marketing, said: "The phenomenal success of Xcent, Grand and Santa Fe increased volumes. We expect to maintain this trend by strengthening our product portfolio and improving channel efficiencies."

The newly launched Honda City, with sales of 72,18 units, helped grow the company's volumes by 18 per cent. The sedan contributed 54 per cent to Honda's overall vehicle sales in the country during May. Ford's sales increased 51.2 per cent to 6,053 units.

"A stable government is a positive development for business sentiment in India. We are hopeful the new government will support industry-friendly initiatives like reduction in excise duty," said Vinay Piparsania, executive director for marketing, sales and service at Ford India.

Toyota Kirloskar increased sales by 18 per cent to 11,833 units, with new models the Etios Cross and the new Corolla Altis clocking sales of about 1,100 units.

Homegrown automobile majors Tata Motors and Mahindra & Mahindra, though, continued to suffer weak demand. Tata Motors' sales dropped 17 per cent on an annual basis to 9,230, while those of Mahindra & Mahindra decreased around 19 per cent to 18,085 units.

Pravin Shah, chief executive (automotive division), Mahindra & Mahindra, said: "Sales continue to remain subdued for many players. We expect to see an improved sentiment resulting in a better economic situation. That, we hope, would lead to a gradual increase in demand."