No brakes in auto sales despite rising fuel price

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Writuparna Kakati | 12 Jul, 2008
Rising fuel prices, rocketing inflation and increased bank interest rates - it seems that nothing could stop Indians driving. Auto sales in India is at top gear despite all odds, and this time it surprises none.

Last month, the Society of Indian Automobile Manufacturers (SIAM) reported that India's automobile industry had recorded an 8.09 per cent rise in its overall vehicle sales in May, 2008. The trend continued again in June and this time SIAM reports a 6.1 percent increase in domestic passenger car sales while sales of motorcycles went up by 8.2 percent.

According to SIAM, the sales of domestic passenger cars were 99,738 units in June compared to 94,002 units of June 2007. The number of motorcycles sold last month was 473,899 against 437,776 units of the year-ago period.

During the period, the total vehicle sales in the country stood at 801,605 units against 751,979 units in the same period of last year, up by 6.59 percent.

However, three-wheeler sales was down by 4.3 percent to 29,804 units against 31,161 units in the same month last year, the report said.

Commercial vehicle sales went up by 13.5 percent to 40,324 units from 35,518 units in June 2007. The sale of light commercial vehicle during the month grew by 20 percent to 18,569 units.

Medium and heavy commercial vehicle sales stood at 21,755 units against 20,055 units in the same month last year, up by 8.4 percent.

In the last couple of years, automobile industry in India has witnessed a tremendous growth. Primarily comprised of heavy vehicles (trucks, buses, tempos, tractors), passenger cars, and two-wheelers, the industry, at present, employs more than 10 million people and the number goes even higher when we add the number of people employed in the auto-component and auto ancillary industry. Major players in this industry include-

Eicher Motors, Tata-Telco, Mahindra & Mahindra, Ashok Leyland, and Bajaj which dominate the heavy vehicles sector.
Maruti Udyog, General Motors India, Hyundai Motors India, Hindustan Motors, Ford India, Fiat India, Skoda India, Toyota Motors, Tata Motors, etc. which dominate the car manufacturing sector, and
Hero Honda Motors, Honda Motorcycle & Scooter India, Bajaj Auto, Yamaha, TVS Motor's, etc. which dominate the two-wheeler sector in the country.

As reflected in the report presented by SIAM, most of the aforesaid manufacturers from different automobile sectors have recorded high growth sales in June, 2008 compared to sales in the same month 2007.

For example, small car Segment leader Maruti Suzuki India posted just 2.4 percent growth at 48,935 units against 47,783 units of the last year period.

Auto major Tata Motors' domestic sales declined by 5.8 percent to 13,307 units from 14,081 units.

The total two-wheeler sales in June increased by 6.4 percent to 601,941 units from 565,433 units in the same month last year, said SIAM.

Hero Honda with 16.56 percent growth in sales led the two-wheeler sector growth. The company sold 277,654 units last month compared to 238,195 units in the year-ago period.

These facts and figures suffice it is to say that Indian automobile has been growing from strength to strength in these years despite frequent oil price hikes which has pushed up in inflation and drove bank interest rates higher. From 1898 when the first car rode down India's roads, Indian automobile industry has come a long way and it is all set to carry on the momentum in the foreseeable future.