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Rising incomes drive automobile sales in India

Automobile sales in India have been growing since early 2009, helped by the government’s stimulus measures, lower interest rates and the launch of several new models. In spite of partial rollback of the stimulus package and a rise in prices, automobile sales have been growing. Companies raised prices on account of higher excise duties, upgradation of production capacity in line with Bharat Stage emission norms and higher raw material cost like tyre and steel.

To everyone’s surprise, sales numbers have been peaking each month for the past 3 months. Some of the companies like Maruti Suzuki India and Hero Honda posted their highest ever monthly sales.

Rising income levels are the main drivers of automobile sales growth. Rising income is reflected by:

  1. A sharp growth in wages and salaries of corporate India (declared in the interim financial results of companies)
  2. An 8% rise in dearness allowance of 50 lakh central government employees plus pensioners. This will result in additional disposable income of Rs 8,131.2 crore in 2010-11
  3. Higher farm incomes

Company-wise sales performance

Maruti Suzuki India recorded highest ever monthly domestic sales in May 2010. While sales in India rose by 27.2%, exports surged by 33.5% compared to the year-ago month. Growth was mainly registered in the A2, A3 and C segments of the company’s portfolio.

Tata Motors’ total vehicle sales rose 41% to 56,779 units in May 2010 over May 2009. Domestic sales grew by 38% to 52,801 units, while exports surged 120% to 3,978 units in May 2010 over the corresponding month last year. The company sold 31,475 units of commercial vehicles in the domestic market, up by 36.82% year-on-year. Despite new launches, domestic sales dropped sequentially by 7% due to lower Indica and flat sales of the Nano. Nano’s sales are expected to move up as production at the new Sanand plant picks up.

Hyundai Motors India recorded a 7% growth in May 2010. The growth is slower in comparison to Maruti as its plant was closed for annual maintenance.

Automobile units sold in May
  May-10 y-o-y

% chg

Hero Honda 435,933 13.9
Bajaj Auto 299,442 61.6
TVS Motors  156,980 31.6
Maruti 102,175 27.9
Tata Motors 56,779 41.3
M&M 45,362 49.4
Note: M&M includes sales of tractors and 3-wheeers

Source: Companies

Riding on the robust trend in demand for two-wheelers, Hero Honda, Bajaj Auto, TVS Motors and Yamaha posted double-digit sales growth in May. New launches, coupled with a low base and festive (marriage) season, helped India’s listed two-wheeler makers post a 33 per cent year-on-year jump in volumes for May.

Highest ever monthly sales were recorded by Hero Honda in May 2010. Growing by 13.9%, sales rose to 4,35,933 units. The company expects to achieve a growth of 15% to reach five million units for the year 2010-11.

Bajaj Auto’s total vehicle sales increased 62% to 2.99 lakh units in May 2010 over May 2009. Motorcycle sales grew 63% to 2,69,488 units, while three-wheeler sales rose 52% to 29,954. Exports jumped 64% to 95,964 units. The company’s volumes were driven by its newly-launched models including Pulsar 135 and Discover 100.

TVS Motors also saw its May sales increase 31.6%, driven by incremental sales of the Jive bike and Wego scooter, and is expected to top two million in sales for the financial year.

Categories: Automobiles
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