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Buoyant festival season on the cards for car makers

Monsoon has sprung some surprises with most auto companies posting terrific sales for July, a trend likely to extend to the auspicious festive season, as demand for new models like Maruti Baleno, Hyundai Creta and Toyota Innova Crysta swelled across segments.

twitter-logo Chanchal Pal Chauhan        Last Updated: August 2, 2016  | 20:09 IST
Buoyant festival season on the cards for car makers

Chanchal Pal Chauhan, Senior Assistant Editor, Business Today
Monsoon has sprung some surprises with most auto companies posting terrific sales for July, a trend likely to extend to the auspicious festive season, as demand for new models like Maruti Baleno, Hyundai Creta and Toyota Innova Crysta swelled across segments.

The mega sales season has eluded the industry for more than three years, but a buoyant rural demand and resilient urban markets that are all set to get a further boost with some windfall gains coming from new pay commission salaries should make up for the losses.

Country's largest carmaker, Maruti Suzuki clocked its best ever monthly sales for July at 125,778 units sold against 110,405 units in same month last year, aided by higher volumes of compact SUV Brezza, Baleno hatchback and the Ciaz sedan. Sales grew 14 per cent last month.

The car market leader, which commands a staggering 46 per cent share in the domestic passenger vehicle market, also announced a price increase of up Rs 20,000 on its soldout model Baleno. Blaming the forex it also hiked prices in the range of Rs 1,500 to Rs 5,000 on various models on Monday while the best selling SUV Brezza is now costlier by Rs 10,000 for its all diesel offerings.

Its South Korean rival Hyundai was fast to react and hiked prices by up to Rs 10,000 for its high selling models like Creta compact SUV after it recorded a bumper 13 per cent growth in July over 2015.

The 41,201 vehicles it sold last month was a record for July with the trio of Grand i10, Elite i20 and the Creta evoking maximum interest from the consumers. "We have witnessed a marked improvement in consumer sentiments with good spread of monsoons, low interest and inflation rates and softer fuel prices. All these are strong indicators for a good festive demand ahead. The new salaries of government employees will act as a strong catalyst," observes Rakesh Srivastava, Senior Vice President (Sales and Marketing) at Hyundai.

Analysts tracking the market say the automotive industry may get the much needed boost from rising consumption witnessed across all the sectors. "Better monsoon, positive customer sentiments and seventh pay commission bonanza should help auto industry to improve much beyond the last fiscal year," says Abdul Majeed, Partner at Price Waterhouse. He echoed the general observation that possible GST roll-out and clarity on diesel vehicles will further increase the growth momentum.

The ongoing ban on bigger diesel vehicles above the 2,000-cc engine size across the NCR-Delhi markets has lasted much beyond anticipation. As it enters its eighth month, Indo-Japanese automaker Toyota Kirloskar Motor posted a 3 per cent gain in sales to 12,404 units last month, without a single unit of its flagship Innova Crysta and Fortuner being sold in its largest Delhi market, since December 2015.

The third largest passenger vehicle company and utility vehicle major Mahindra and Mahindra posted an impressive 20 per cent growth in July, pushed by surging demand for its compact KUV100, while its tractor segment also witnessed a 15 per cent sales jump signaling a revival in rural markets.

Pravin Shah, President & Chief Executive (Automotive) at the company credited the gains to surplus monsoon. "The advent of a good monsoon so far, has bought in positive sentiment for the economy and that is somewhat reflected in our performance last month," he said.

In a market like India where sales are driven largely by sentiments and companies are trying their best to bring customers back into the showrooms, nothing works better than new cars that get highest traction, without much effort.

French carmaker Renault fits perfectly into the bandwagon with its new offering Kwid, which contributed about two-thirds of its July volume. It sold 9,897 Kwid in July of the total 11,968 domestic sales in July 2016. If its other models had had a similar performance, the 609 per cent rise in sales over 1,686 units sold in July 2015, may have gone astronomically bizarre.

Its alliance partner Nissan more than doubled its sales in July riding on dispatches of its new car, RediGo, while American carmaker Ford domestic sales grew 62 per cent to 7,076 vehicles up from 4,362 units of last year on the back of its new Figo and Figo Aspire that has improved performance lately.  

But there were some surprises, too. Japanese carmaker Honda India failed to capitalise on the changing scenario and continued its decline for another month. In fact, the 24 per cent dip in July was the worst in the group of large automakers as its best performer; City, clocked 4,317 units, far less than the 5,100 units done by Ciaz of Maruti Suzuki. Some respite came from its new compact SUV BR-V, which sold 3,333 units.

Domestic sales for July


 

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