Auto sales in India: hurdling oil price hike, inflation led higher interest rates

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Writuparna Kakati | 12 Jun, 2008
While higher oil prices started causing havoc far beyond the petrol pumps, the figures released by the Society of Indian Automobile Manufacturers (SIAM) have surprised everyone.

According the recent figures released by SIAM, India's automobile industry reported an 8.09 per cent rise in its overall vehicle sales in May, 2008. While the domestic passenger car sales registered a growth of 14.26 per cent total two-wheeler sales were up by 7 per cent in May this year.

This growth in automobile sales in the country, despite skyrocketing oil prices (crude oil price has already up to $130 compared to $20 per barrel five years back) has made experts think that India's automobile industry will continue to grow this year despite all obstacles- oil price hike, higher interest rates and and finance availability continuing to be a major issue.

According to the report released by SIAM, the passenger car segment clocked sales of 1,10,743 units during May, 2008, against 96,923 units in the same month previous year while total domestic vehicles sales stood at 8,52,872 units, against 7,89,041 units in the same month last year.

SIAM reports that total two-wheeler sales during the same period rose by seven per cent at 6,47,358 units, compared to 6,05,014 units in the same month last year. On the motorcycles front, the sales jumped by 7.39 per cent at 5,13,209 units, against 4,77,901 units during the year-ago month.

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 all automobile sectors have recorded high growth sales in May, 2008 compared to sales in the same month 2007.

For example, small car Segment leader Maruti Suzuki India's sales grew by 16.13 per cent (from 49,354 units to 57,315 units) while Hyundai Motors' sales grew by 47.48 per cent (from 16,617 to 24,506 units). Similarly, General Motors India's sales rose 6.12 per cent (from 3,625 units to 3,847 units) while Tata Motors sold 14,228 units, against 14,217 units in the same month previous year.

In the two wheeler sector, motorcycle market leader Hero Honda Motors' sales grew by 10.33 per cent (from 2,69,532 units to 2,97,387 units) while Bajaj Auto and TVS Motor's, however, recorded a marginal increase (from 1,29,724 units to 1,30,068 units, and 41,724 units to 41,901 units, respectively.

Scooter market leader Honda Motorcycle & Scooter India' sales grew by 2.30 per cent (from 54,601 units to 55,858 units) while Hero Honda Motors' pushed its sales by 15.81 per cent at 9,422 units in May, 2008 from 8,136 units in the same month last year.

These facts and figures suffice it is to say that Indian automobile will only grow from strength to strength in the coming years despite all odds, and even if oil prices continue to push up in inflation and drive 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.