Dis­counts, New Mod­els Help Sell 2.5 L Cars

Car sales rise 4.5% in March; Maruti, Hyundai Mo­tor In­dia unit drive growth; whole­sale vol­ume es­ti­mated to have risen 7-8% ROUGH ROAD

The Economic Times - - Companies - Sharmistha.Mukher­jee @times­group.com

New Delhi: Sales of pas­sen­ger ve­hi­cles in the do­mes­tic mar­ket rose 44.5% to 250,000 units last month, driven by new mod­els and year-end dis­counts of­fered by com­pa­nies to push sales, ini­tial in­dus­try num­bers show. In the fis­cal year ended on March 31, whole­sale vol­ume is es­ti­mated to have risen 7-8% to 2.7-2.8 mil­lion.

In­dus­try growth last month, though, was largely driven by mar­ket leader Maruti Suzuki and the lo­cal unit of Korean ri­val Hyundai Mo­tor. While Re­nault postead a more than two-and-half times in­crease in vol­ume to nearly 12,500 units on ac­count of the suc­cess of the small car Kwid and Mahin­dra & Mahin­dra recorded a sharp jump in sales, for the rest the mar­ket proved to be choppy.

In the last quar­ter of fis­cal 2016, the pas­sen­ger ve­hi­cle in­dus­try could post growth of just 2.2%, as the spurt in de­mand seen dur­ing the Oc­to­ber-De­cem­ber festival pe­riod abated. In the three months through March, sales of pas­sen­ger ve­hi­cles grew a mere 0.7%. Vol­ume came largely from de­mand for new util­ity ve­hi­cles such as the Hyundai Creta, Maruti Brezza, Mahin­dra TUV300 and KUV100, as a de­fi­cient mon­soon hurt de­mand for ent- ry-level pas­sen­ger cars such as the Alto, Eon and i10 in ru­ral ar­eas. “Growth in the In­dian au­to­mo­tive sec­tor has not been up to the mar­ket po­ten­tial, es­pe­cially in the last three months,” said Ab­dul Ma­jeed, part­ner at Price Water­house. “The rea­son for low growth is mainly due to the ban of big­ger diesel ve­hi­cle (over 2000 cc) in the NCR belt. The other ar­eas of con­cern con­tinue to be lower off-take of new ve­hi­cles in the ru­ral mar­ket, liq­uid­ity con­cerns and con­tin­ued higher in­ter­est rates. The im­po­si­tion of in­fra­struc­ture cess in the lat­est bud­get added to the woes of the auto mak­ers.”

Mar­ket leader Maruti, which posted record do­mes­tic-plus-ex­port sales of 1.43 mil­lion units in the last fi­nan­cial year, man­aged to beat the blues with vol­ume grow­ing 14.6% in March. Sales grew across seg­ments, ex­cept in small cars Alto and WagonR.

Ex­ec­u­tive Di­rec­tor for Sales and Mar­ket­ing RS Kalsi said: “We in­tro­duced a to­tally dif­fer­ent for­mat of prod­ucts, came out with new tech­nolo­gies like smart hy­brid and au­to­matic gear shift, fo­cused on im­proved distri­bu­tion, which helped us in­crease mar­ket share to 46.7%. This fis­cal (year), too, we are look­ing at out­pac­ing in­dus­try growth of around 7-8%.”

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