Car sales in India got back in positive territory in 2014 with a 2.46 percent increase on excise duty reductions brought in by the government to propel the struggling industry. However, with the excise duty concessions gone, industry body SIAM is expecting a marginal increase of around one percent in this fiscal against an earlier expectation of four percent.
Passenger car sales during the January-December period rose to 18,51,475 units as against 18,06,965 units in 2013, a growth of 2.46 percent.
This is in contrast to the 9.59 percent dip in 2013 which was the first time in eleven years that car sales declined in the country. "Vehicle prices were down for the nine months in the previous calender year due to excise duty reductions. It helped in creating a positive sentiment thus helping growth in sales," Society of Indian Automobile Manufacturers (SIAM) Deputy Director General Sugato Sen told reporters here.
"The industry sold 1.8 million cars in 2014, it is not a very significant growth over 2013 but it is better than a negative growth," he added. Sen said despite the expiry of excise duty concessions, the industry is expected to grow marginally in the current fiscal. "We expect a low single digit sales growth of around one percent during the financial year.
We are not anticipating negative growth this fiscal," Sen said, adding that earlier it was estimated that car sales could grow by around four percent in the current fiscal.
Commenting on the motorcycle segment, which posted a growth of 6.21 percent in sales in 2014, Sen said the sector grew primarily due to relief in excise duty during the year. Motorcycle sales last year stood at 1,09,13,003 units as against 1,02,75,001 units in 2013.
When asked about the commercial vehicle segment, which saw sales drop by 11.8 percent to 6,06,232 units in 2014, Sen said the sector did not perform well as "real economic activity is still to gain steam."
Commenting on implications of higher excise duty, Sen said: "There will be some negative impact. Customers have advanced their purchases in December so there could be an impact on sales in January and February." The excise duty relief created a very positive sentiment, which helped the industry, but now that it has been withdrawn, it remains to be seen how much impact it would have, Sen said. He added that a cut in interest rates might help the industry recover from the impact of increased prices.
"The most vulnerable segment is small cars. It is the most sensitive segment as far as pricing is concerned. It is going to be the first one to be hit due to expiry of excise duty relief," Sen added.
Asking for the excise concessions to be brought back in the upcoming Budget, Sen said: "We would continue to say and argue for reduction in interest rates. The auto industry is taxed heavily and it is not viable. The government needs to look at it in a comprehensive manner."
In December, domestic passenger car sales rose 15.26 percent to 1,52,743 units, aided by advance purchases by customers due to imminent rise in prices due to expiry of excise duty concessions. The 15.26 percent growth witnessed during the month was the highest so far in the ongoing fiscal.
In December, the country's largest carmaker Maruti Suzuki India posted a growth of 11.5 percent in its domestic sales at 81,564 units as against 73,155 units in the same month previous year.
Rival Hyundai Motor India had sold 32,429 units during the month as compared to 28,320 units in the year-ago month, a gain of 14.5 percent. Honda Cars India's December sales zoomed 124.44 percent to 12,308units as against 5,484 units in December 2013. Homegrown utility vehicle major Mahindra and Mahindra 's UV sales were at 17,082 units as against 15,881 units in the same month previous year, up 7.56 percent.
Tata Motors also saw its car sales grow by 52.3 percent in December 2014 at 9,956 units as against 6,537 units in the year-ago month. Motorcycle sales last month declined 3.52 percent to 7,79,908 units from 8,08,389 units a year earlier.
"Motorcycle sales are to a large extent linked to rural demand. It is not very robust at the moment. With rural incomes down, it is a bother for the industry," Sen said. In the motorcycle segment, market leader Hero MotoCorp sold 4,32,123 units in December 2014, down 4.72 percent from 4,53,532 units in the same month previous year.
Bajaj Auto also saw its December sales decline by 21.13 percent at 1,06,919 units as against 1,35,567 units in the year-ago month, while Honda Motorcycle and Scooter India
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