Automobile business on high spirits

Mumbai: Automobile manufacturers reported a healthy set of sales volume for the month of June, 2014 as the political stability at the center and the lower excise duty on automobiles boosted consumer sentiments.

While Maruti Suzuki and Hyundai reported 31.1 per cent and 9.5 per cent growth in its domestic sales during June as compared to the same period last year, Mahindra and Mahindra (M&M) managed to arrest its 12 consecutive month of de-growth by posting a marginal increase of 1 per cent in its domestic sales during the period. 

Even the two-wheeler segments reported robust sales numbers with Yamaha Motor India registering a growth of 14.3 per cent in domestic sales during June, 2014.

“We have seen an increase in enquiries from customers. With the government extending the lower excise duty on automobiles till December, 2014, we expect these enquiries to get converted into actual sales going forward,” said Pravin Shah, chief executive, automotive division and international operations, Mahindra and Mahindra. 

The impressive set of sales figures from India’s leading automobile manufacturers had a positive impact on the stock market with the bombay stock exchange auto index gaining 3.24 per cent.

“There has been a revival in the two wheeler’s and passenger car segments during June 2014. Customers who had postponed their purchases during April and May 2014, bought during June. For instance, Maruti Suzuki’s domestic wholesale volume during June was one lakh whereas its actual retail sales during the month was 1,07,000, which shows that there was actual demand in the market,” said Surjit Arora, automobile research analyst, Prabhudas Lilladher.  

However, he added that the commercial vehicle sales volume would continue to remain in the negative territory till there is a strong revival in the domestic economic activity.

On a different note, an auto analyst at a domestic brokerage firm, who did not wish to be named, said that the lot of buying happened during June  on fears that the new government would roll back the excise duty cut announced in the interim budget.

“There was pre-buying, which happened on fears about a possible roll back of excise duty. For the actual revival in the auto sector, the buying momentum seen during June should be sustained for another 2-3 months,” he said.