Brisk pace in February

Passenger vehicle sales of most auto makers rose in February on the back of higher despatches to dealers before the end of the fiscal year. Sales were propped up by new models for some companies, according to monthly sales data released by auto firms on 1 March.

Car market leader Maruti Suzuki India Ltd led the charts with volumes rising 11.7% to 120,735 units from a year earlier. Sales of the company’s compact car models rose 9.4%, while those of entry-level models such as Alto and Wagon R declined 6.8% from last year. Utility vehicle models led by Brezza more than doubled to 17,863 units.

Hyundai Motor India Ltd, the second largest car maker, also saw sales increase 4% to 42,327 units, compared with last year’s. Rakesh Srivastava, senior vice president, sales and marketing, attributed the growth to “improved customer confidence generated by the Union Budget” which in turn has positively impacted disposable incomes and overall business sentiment.

Unlike two-wheelers, which continue to reel under the impact of demonetisation, passenger vehicle sales have been resilient as even during the peak of the note ban impact, sales expanded at most auto firms owing to underlying strong demand, said Subrata Ray, an analyst at ICRA Ltd.

ICRA expects passenger vehicles sales to end fiscal 2017 with a 10% growth over the last year.

February was also a month of brisk sales expansion for others in the industry, including Tata Motors Ltd, Toyota Kirloskar Motor India Ltd, Honda Cars Ltd, Renault India Pvt Ltd, Ford India Pvt Ltd and Nissan Motor India Pvt Ltd. Most of these companies saw sales advance in high single to double digits over the year-ago period. Recent launches also boosted sales at these firms.

The only exception was utility vehicle maker Mahindra and Mahindra Ltd, whose passenger vehicle sales fell 13% to 20,605 units over the year-ago period.

Pravin Shah, president and chief executive of the automotive sector at Mahindra, attributed lower sales to the high base effect of last February and the impact of demonetisation. “Last Febru ary was the first full month for the KUV100 (a small compact utility vehicle it launched on 21 January 2016). The volumes have come off since then.”

To be sure, unlike other man ufacturers, Mahindra has a higher rural exposure with close to a third of its sales coming from rural areas.