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Bears drive into auto sector

Bears are knocking at the doors of domestic carmakers, car market leader Maruti Suzuki India Ltd registered a flat 0.2 per cent growth in June 2008, reports HT Correspondent.
None | By HT Correspondent, New Delhi
UPDATED ON JUL 01, 2008 11:14 PM IST

Bears are knocking at the doors of domestic carmakers. After holding up against high interest rates, inflation and oil prices for the first two months of this fiscal, car market leader Maruti Suzuki India Ltd registered a flat 0.2 per cent growth in June 2008 over the same period last year.

Maruti, which controls more than half of the car market in the country, sold 55,899 cars in June. The A2 segment, comprising Alto, Zen Estillo, Wagon R and Swift registered a marginal growth of 0.3 per cent in stark contrast to the first two months where it had grown by 27.3 and 14.5 per cent, respectively.

Clearly, all expectations of high fuel costs converting big car buyers to small cars have come to naught.

"It is important to look at June in comparison with April and May and the fact that the numbers have declined by almost 12 per cent suggests that high interest rates have impacted sales," said Pradeep Saxena, senior vice-president, TNS Automotive. "The sentiment is bearish with too many things going wrong at this point of time. I expect a flat year for carmakers."

Archrival Hyundai Motor India Ltd (HMIL), however, ducked the trend largely on the back of its latest hatch i10, which ensured its small car sales remain healthy. Hyundai posted a 34 per cent growth in the domestic car sales at 21,877 units against 16,314 units last year.

Meanwhile, Tata Motors reported a 5.5 per cent decline in passenger car segment as sales of its small hatch Indica went down by 27 per cent in June. The company on Tuesday admitted that it is going to be a challenging year for the auto industry.

Unlike cars, two wheelers continued to defy pessimism with market leader Hero Honda registering a 16 per cent growth in June. Second and third placed Bajaj Auto Ltd (BAL) and TVS Motor Ltd grew by 7 and 2 per cent, respectively during the month.

"We remain cautiously positive about the future, as our sales performance comes amidst continuing uncertainty over interest rates and overall credit squeeze," said Anil Dua, senior vice-president, marketing and sales, Hero Honda Motors Ltd.

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