Home > Automobiles, Tyre > Automobiles – Round Up 2009-10

Automobiles – Round Up 2009-10

I was reading about India being the second fastest growing automobile market after China. A look at the numbers reveal that China’s automobile market grew by 42%, followed by India’s at 26% and third comes Germany with 23% year-on-year growth.

Sales growth of automobile vehicles in India during financial year 2009-10 was the biggest percentage rise in seven years. This growth came over a 3.3% increase in the previous year. Payment of the sixth pay commission arrears, new model launches and higher farm income drove sales.

Break-up of the various segments is as follows:

  • Sales of commercial vehicles surged by 35% compared to a 22.3% fall in the previous year. While the light commercial vehicles (LCVs) segment has done well, the medium and heavy commercial vehicles (M&HCV) segment has not yet reached the 2007-08 levels.
  • Both the two-wheeler and three-wheeler segments sales grew by nearly 24% each. Motorcycles sales rose by 26%, while the scooter sub-segment grew 27%.
  • Aided by strong demand of cars due to the scrappage incentives announced in Europe, exports of cars in the 2009-10 grew 18%. Total sales of passenger vehicles increased by 27% compared to 6.8% a year earlier.
  • Automobile exports in FY10 stood at 1,804,619 units compared to 1,530,594 units in FY09.

Number of vehicles sold by Indian Automobile Manufacturers

 

FY-07

FY-08

FY-09

FY-10

Commercial Vehicles

      517,302

      549,488

          426,819

      576,402

Passenger Vehicles

   1,578,431

   1,768,283

       1,888,432

   2,395,922

Two Wheelers

   8,491,978

   8,068,991

       8,441,793

 10,511,415

Three Wheelers

      547,806

      506,006

          497,793

      613,650
Total of the above

 11,135,517

 10,892,768

     11,254,837

 14,097,389

Automobile sales surged post announcement of the various stimulus packages announced by the government. Standard excise duty rates were slashed from 12% to 8% (in two tranches). This, together with a collapse in the commodity prices resulted in cheaper vehicles. With lower prices, a slew of new launches, cheaper auto loans and improvement in consumer sentiments, automobile sales surged.

For how long will this trend go on?

Hike in standard excise duty to 10% is resulting in a hike in prices of raw material used by the auto industry. A rise in the price of steel and aluminium, have already been announced, post the union budget 2010-11 on 26 feb 2010. Higher raw material costs, imposition of higher standard excise duty and increase in excise duty on sports and multi-utility vehicles  to 22% has made the automobile companies raise prices of vehicles. In fact my earlier post https://industrytracker.wordpress.com/2010/04/21/consumers-of-automotive-vehicles-get-ready-to-shell-out-more/ indicates that if prices of natural rubber keep rising, tyre companies may land up raising prices further (third time in 2010).

A few private banks have announced an increase in interest rates on automobiles. Higher prices (on account of higher excise duties) as well as increase in interest rates by private banks will be a twin blow to automobile purchasers. Also, a rise in prices of petrol and diesel could also derail/dampen sales growth.

However, it must be noted that the budget proposals will result in a rise in disposable income with the consumers, on account of personal income tax savings (covered in my article – https://industrytracker.wordpress.com/2010/04/16/personal-income-tax-slabs-for-fy-11/), which will partially negate the effect of higher prices and interest rates.

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Categories: Automobiles, Tyre
  1. Rahul Vanjare
    April 24, 2010 at 5:57 am

    Great article. Crisp information and presented very well.

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