Car-makers cautious despite buoyant Q1 sales.

Mumbai, July 2 Despite sales being quite buoyant in the first quarter, the passenger car industry is still cautious about the future.

Market leader Maruti Suzuki grew 18 per cent to clock 2.27 lakh units in the April-June period while Hyundai Motor India was up 12 per cent at 1.35 lakh cars. Mahindra & Mahindra’s utility vehicle range showed a 28 percent increase at 48,720 units. Only sales of Tata Motors’ cars fell 15 per cent to 45,000 units in the quarter.

“Maruti has been consistently outperforming the industry growth rate of around five per cent. However, the auto sector is not out of the woods yet and it is still too early to predict a positive outlook,” said Mr Mayank Pareek, Executive Officer, Marketing, Maruti Suzuki.


“The growth we are seeing now is largely due to new models. We cannot say the worst is behind us because the market continues to be tough. The second quarter may also see growth mainly because of the low base though, last year, the decline had begun from July,” said Mr Arvind Saxena, Senior Vice-President, Sales & Marketing, Hyundai Motor India.
Export boost

For these top carmakers, the scrapping incentives in Europe have boosted export sales coupled with the fad for small cars in Europe. Hyundai shipped 72,000 units of i20 in the last couple of months, while exports of Maruti’s A-Star have crossed 45,000 units since January.

While there were positives in the form of an interest rate cut, excise duty reduction and easier credit, there are grim realities to contend with such as poor rains and fuel price hike.

“The fuel price increase is not good news and could create a shock effect. However, customers will eventually revert to normal buying. As for the rains, they have been good for the last four years and one marginal blip may not impact sales greatly,” Mr Pareek said.


“The hike will not influence buying decisions and what we are more concerned about is the Budget,” Mr Saxena added.

There are also apprehensions that there will be a rollback of duty cuts announced in the recent stimulus package.

“We saw some signs of revival in the last couple of months. Policies should be made taking into account long-term growth of the industry and cannot be changed every now and then,” Mr Pareek said.

“We are certainly not on a growth path. The Government knows well what needs to be done for long-term growth of the industry,” said Mr Pawan Goenka, President, Auto Sector, M&M.


Source : Business Line