India: Auto sales accelerate in October

Sales of the country’s largest car maker Maruti Suzuki and other auto makers received a boost in October as easy finance and festival season drove up demand.

Maruti Suzuki crossed the one-lakh mark in domestic sales for the first time in its 27-year-history, driven by a strong demand for its fuel-efficient compact cars such as Alto and WagonR.

Mahindra & Mahindra posted a growth of 34% in its domestic sales against the year-ago period. The company also recorded a 212% increase in two-wheeler sales to 21,204 units in October, according to a release. “Our passenger UV segment has also shown a growth of 21%,” said Rajesh Jejurikar, chief executive, automotive division, Mahindra & Mahindra.

“Sales are expected to rise further on the back of rising incomes, positive consumer sentiment, availability of easy finance and a slew of new and old models to choose from,” said Abdul Majeed, auto practice leader, PricewaterhouseCoopers (PwC).

Margins may come under pressure in the next few quarters as prices of raw materials are expected to go up. Analysts said companies will be forced to increase local sourcing of critical components to maintain margins. Demand for cars in India has risen more than 30% this year and may double to 3 million vehicles annually by 2015, according to the Society of Indian Automobile Manufacturers (SIAM).

Tata Motors, the country’s largest auto maker by sales, recorded a 22% rise in sales at 24,478 units during the month. However, its small car Nano is struggling to draw customers in a fast-growing market. The company sold 3,065 units in October, the lowest in this fiscal year. Nano’s sales has been consistently falling from July as a spate of reported incidents of the car catching fire has raised fears over the safety aspects of the much-touted ‘people’s car’ among potential customers. Despite falling sales, Tata Motors has raised prices of the low-cost car by Rs 9,000 last week.

Korean auto major Hyundai’s sales rose 23% to 34,725 units in the month. “The market has been on an upswing for the past few months but the introduction of the new i10 has really pepped up things for us,” said Arvind Saxena, director, marketing and sales, HMIL.

The country’s largest two-wheeler maker Hero Honda reported record despatch sales of over half-a-million units in just one month. It sold 5,05,553 units of two-wheelers in October 2010, a growth of 43%. “A refreshed product range coupled with innovative branding and marketing initiatives, particularly revolving around the Delhi Commonwealth Games , has been attributed to this success,” said Anil Dua, senior vice-president (marketing & sales), Hero Honda.