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Interest rates, fuel price hike dampen automobile sector

Wednesday June 01, 2011 08:32:09 PM, IANS

New Delhi/Chennai: Interest rates and fuel price hikes seem to have dampened automobile sales in May, with leading players like Maruti Suzuki and Hyundai reporting only marginal growth.

Indian car market leader Maruti Suzuki reported a 1.9 percent increase in sales for May with 104,073 units sold, compared to 102,175 in the corresponding period of 2010.

Domestic sales registered a 3.86 percent growth at 93,519 vehicles -- up from 90,041 last year, while exports fell by 13 percent with 10,554 cars sold in the month under review, compared to 12,134 in May 2010.

Segment wise, the company's largest selling A2 compact car, comprising of Alto, Wagon-R, Estilo, Swift, A-Star and Ritz, saw a 2.6 percent drop in sales with 61,048 units sold.

Hyundai Motors, the country's second largest car maker, saw its overall sales growing marginally in May at two percent due to weak exports.

According to the Chennai-based company, the sales were affected in the first quarter of the year due to increase in interest rates and fuel prices among other factors like appreciating input costs.

However, the company's domestic market sales were boosted by 14.6 percent to 31,123 units as against 27,151 units in May 2010, due to the success of its recently launched sedan - Fluidic Verna.

Exports fell by 15 percent to 16,643 units in May as against 19,657 units in the corresponding month last year.

Segment-wise, cumulative sales for last month was led by the company's best-selling A2 segment cars like Santro, i10, i20 at 40,520 units, which was followed by the A3 sedan segment cars comprising of Accent and Verna at 7,110 units.

Meanwhile, American auto major General Motors' Indian subsidiary reported an increase of 1.3 percent in sales for May at 8,329 units as compared to 8,225 units in the like period of 2010.

"Given the hike in interest rates, fuel prices, commodity prices, inflation, we expect the market to remain depressed in the coming months as well," said GM India vice president P. Balendran, adding that even enquiries at the company's showrooms have come down.

Japanese car manufacturer Honda Siel Cars India's (HSCI) sales were dented with a decrease of 42.61 percent in May's sales which stood at 2,334 units as against 4,067 units sold in May last year.

However, compact car Figo contributed majorly to an 11.38 percent increase in overall sales of Ford's Indian subsidiary which sold more than 9,000 units in May as against the overall sales of 8,080 units in the like period of 2010.

But the sliver lining in automobile sales came from two-wheeler and three-wheeler segments where major players like Hero Honda and TVS came out with robust sales figures.

World's largest two-wheeler manufacturer Hero Honda reported an increase of 15 percent in its sales for May which stood at 500,234 units as compared to 435,933 units in the like period of 2010.

"We have crossed one million sales mark in the very first two months of this fiscal," said Anil Dua, senior vice-president, marketing, Hero Honda Motors Ltd, adding that the company was well on its course towards achieving over six million sales unit in this fiscal.

Meanwhile, TVS Motor attributed its 18 percent sales growth in last month to increase in exports and motorcycle sales.

In a statement, the company said that its total sales last month stood at 185,930 units, as against 156,980 units in May 2010.

Segment wise, the company's sales were led by its two-wheeler product line-up with sales reaching 181,891 units in May as compared to 154,667 units sold in May 2010. The three-wheeler sales grew to 4,039 units, compared to 2,313 units in May last year.

Exports for the month under review grew at 42 percent and stood at 26,168 units as against 18,482 units in May 2010.




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