Domestic car sales hit record high in February

Car sales in India hit a record monthly high of 1.89 lakh units in February as customers advanced purchases in anticipation the government may hike excise duty in the Budget. Sales were also driven by rising disposable income with the middle-class , easy availability of loans, and a pick up in new product launches.

Car sales rose by 23% in February compared with a year earlier, data released by industry body Society of Indian Automobile Manufacturers (SIAM) showed Wednesday. The February sales number is higher than the record 1.84 lakh cars sold in January.

The Budget for 2011-12 , however, left excise duty unchanged at 10-22 % for different segments of cars, contrary to an expectation of a 2% hike. "Car prices have not increased much despite rise in global commodities prices like steel and rubber . Also, customers are enjoying flexible financing options. In future , however, we expect higher base of 2010 to moderate growth rate," SIAM Director General Vishnu Mathur said. Maruti Suzuki, the country's largest carmaker, reported 19.8% year-on-year growth in sales in February to 101,543 units.

"There was more demand in the market than what we could supply as we faced severe scarcity for our highrunning models like Alto and WagonR," a senior official from Maruti said. Hyundai sales grew 5.3%, while Tata Motors car sales grew 14% during the month. Two-wheeler sales in February grew 22% to a record 10.22 lakh units. The growth in the segment was primarily driven by market leader Hero Honda that posted 24% increase in sales to 4.62 lakh units last month. Sales of trucks and buses grew 11% in February to 64,057 units led by Tata Motors, Ashok Leyland , and Eicher Motors.

India's total domestic vehicle sales in the current fiscal year is expected to grow 26-27 % year-onyear , higher than SIAM's earlier estimate of 18%, said Mathur. However, rising interest rates on auto loans and spiraling global commodities prices, including crude oil, are concerns for the sector going forward.

Indian automobile sector ushers in new FY on positive note

The Indian automobile sector is ushering in the new financial year on a positive note. Sales across all major categories registered growth in April compared to the same month a year earlier.

Maruti Suzuki India reported nine per cent growth. The company is a subsidiary of Japan's Suzuki Motor and it sells one out of every two cars in India.

As for Hyundai Motor India, the country's second largest carmaker, sales were up 3.5 per cent.

Shinzo Nakanishi, managing director, CEO, Maruti Suzuki Ltd, said: "Since last December, the government has announced several stimulative measures, including excise duty cut, which has definitely helped us to survive in this auto industry."

A four per cent reduction in excise duty was one of the measures taken to help revive India's slowing economy and it has had the effect of boosting consumer spending by making things cheaper.

Growth in the auto sector for the month of April was also driven by new launches. Last year, Maruti Suzuki India launched A-Star, a car manufactured only in India. It helped exports surpass the company's previous record set in March 2004.

Another model, Dzire was launched in March. It helped Maruti to double its sales in the A3 segment.

People are also making a bee-line for two-wheelers. Honda Hero saw sales go up with the introduction of two new models.

Hiroshi Nakagawa, MD, Toyota Kirloskar Motor, said: "I strongly believe Indian economy is fundamentally very strong. So it's time to enjoy the growth."

However, analysts warn that it does not indicate a revival in consumer demand. The growth is relative to a low-sales base seen in April 2008. When compared to March this year, the sale of passenger cars and commercial vehicles in April have actually fallen by 20 per cent.

In addition, problems such as lack of funds and banks' unwillingness to provide loans continue to haunt the Indian automobile industry.

The sector has its wish-list ready for the new government that will assume office soon. Firstly, it wants the tax sops given to the industry to continue.

And with the Left parties no longer blocking economic reforms, the auto industry wants immediate approval of foreign investment in the country up to 100 per cent, with no minimum investment criteria.

Skoda prepares to thrill with four new models

Czech automobile manufacturer Skoda Auto plans to launch four models next year. It is also setting up a financing outfit.

At present, Skoda sells four models in the country — the hatchback Fabia, and the sedans, Octavia, Laura and Superb. They are priced in the range of Rs 4.8 lakh to Rs 24 lakh.

Next year, there will be the Fabia Sports and Fabia Combi along with new versions of the Laura and Superb.

Skoda has recently launched its compact car, the Fabia, in India. It’s an upmarket hatchback priced between Rs 5 lakh and Rs 7.68 lakh.

The car is available in three engine variants — 1.2 and 1.4 litre petrol and 1.4 litre diesel.

The Fabia Sports will carry a tag of Rs 10 lakh, while the Fabia Combi is expected to be built on parent company Volkswagen’s B6 platform.

Skoda plans to sell 20,000 units in this calendar year against 13,000 last year. It has already sold 9,556 cars in the first six months.

In July, Skoda had raised the prices of all its models. The hikes were in the range of Rs 16,000 to Rs 25,000.

Finance arm

A credit crunch resulting from a tightening of lending norms by financial entities has prompted Skoda to set up the finance arm.

According to Thomas Kuehl, member of board (sales and marketing), Skoda Auto India, “Since 80 per cent of our total sales are financed, the company has decided to launch Skoda Finance in the country. It should be operational by the last quarter of this year.”

Companies such as Bajaj Auto, Tata Motors, Maruti Suzuki, Hero Honda, Mahindra and Mahindra are focusing on non-banking financial companies to help accelerate sales that have been lean in the past few months.

Hero Honda has tied up with Fullerton India, a non-banking finance company, to support purchases on the basis of loans.

Hero Honda hikes 100cc bike prices by upto Rs 850

Two-wheeler market leader Hero Honda on Thursday, August 7 increased the prices of its 100cc bikes by up to Rs 850 on account of rising input costs, reports agency sources.

The company, however, maintained the price hike has been restricted only to its 100cc bikes as of now.

Rising input costs have forced bike makers to hike prices even though market conditions remain challenging due to high interest rates and tight retail financing.