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Auto sales drop by 7.5% in Jan

BS Reporter in New Delhi | February 10, 2009 13:03 IST

Automobile sales in January dropped 7.45 per cent, compared to the same month in 2008. Despite the decline, it is the first indication that the fall in sales, which occurred between October-December 2008, could be bottoming out and many hope for a recovery in February or March.

Auto sales dipped in the double-digits, ranging between 14 and 18 per cent between October and December over the last year.

Figures released by the Society of Indian Automobile Manufacturers (SIAM) indicate a pick-up in sales for January 2009, during which the industry sold 7,68,622 units. January sales reflect a certain degree of optimism in the two stimulus packages announced by the government over the last two months.

Whether this optimism is sustained in February and March depends on these multiple measures continuing plus the RBI measures spelt-out recently, and the interim budget to be presented next week, says Dilip Chenoy, DG, SIAM.

Passenger vehicle sales in January dipped by a 6.88 per cent to 1,37,284 units. In December 2008, car sales dipped by about 14 per cent over the last year.

The improvement in January sales comes on the back of many measures: the stimulus package announced in December, which included an excise duty cut of 4 per cent on cars, the discounts offered by car companies, the 6th pay  commission, and new model launches like the A-Star, which boosted sales of market leader Maruti Suzuki in January. Maruti, which controls over 50 per cent of the domestic market share, grew by 6 per cent in January.

Sales of two-wheelers dipped by about 4 per cent  in January 2009 to notch 5,81,742 units. This is a marked improvement, compared to the sales decline of 18 per cent in December.

The turnaround in performance in January comes on the back of market leader Hero Honda growing by about 6 per cent in January while all other companies witnessed a negative growth. Sales of three-wheelers dipped by 12.29 per cent for the same period to 26,439 units.

Sales of commercial vehicle for January dipped by 51 per cent to 23,157 units. Similar declines were witnessed in the October-December period of the last year. Industry executives say recovery is in sight for the CV industry.

The cut in diesel prices by about 10 per cent, which has improved the operating profit margins for truckers, the depreciation benefits, the pick-up in manufacturing, and the reduction in excess truck capacity due to the steep dips in CV sales and production cuts will all result in resumption of CV sales in the coming months, says Somnath Bhattacharjee, vice-president, sales & marketing, Volvo Eicher Commercial Vehicles.

Industry analysts are hopeful of a recovery from February. The Supreme Court guidelines on recovery of vehicles in case of a loan-default should also provide some confidence for NBFCs to write fresh vehicle loans.


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