Car sales revive marginally in March on excise duty cut

Cars sales showed signs of picking up in March after the excise duty cut announced in the Budget, with Hyundai, Honda, Nissan and Ford India posting improved sales, although Maruti Suzuki and Mahindra reported decline.

Hyundai Motor India Ltd's (HMIL) domestic sales rose by 3.38 per cent to 35,003 units from 33,858 units in March, 2013. Honda Cars India also reported 83.4 per cent increase in its domestic sales at 18,426 units. Ford India's domestic sales were up 20.58 per cent to 6,356 units.

Similarly, Nissan Motor India today reported over three- fold increase in its sales in March at 7,019 units, riding on the back of its newly launched entry-level small car Datsun Go.

Commenting on the market condition, Ford India Executive Director (Marketing, Sales and Service) Vinay Piparsania said: "The excise duty reduction has definitely been a positive step. As India gets set to vote, we look forward to such industry-friendly initiatives being sustained to support the important automotive sector."

Expressing similar sentiments, Mercedes-Benz India Managing Director and CEO Eberhard Kern told PTI: "The duty cut stimulated sentiments in the retail market a bit but it wasn't so big."

Mercedes Benz reported 27.12 per cent increase in its sales in India in the first quarter of 2014 at 2,554 units.

Nissan Motor India Vice-President Business Management Ajay Raghuvanshi said ever since the excise duty was cut, inquiry levels have gone up and in the last ten days of March the conversion to purchase also improved.

However, the improvement in sentiments did not result to positive growth for the country's largest car maker Maruti Suzuki India with its domestic sales declining by 5.2 per cent during the month to 1,02,269 units as against 1,07,890 units in March 2013.

Sales of the company's bread and butter segment mini cars comprising M800, Alto, A-Star and WagonR declined by 11 per cent to 40,085 units, while those of premium compact cars consisting of Swift, Estilo, Ritz rose by 9.3 per cent to 28,285 units in March.

Homegrown Mahindra & Mahindra's also saw its domestic sales down by 1.49 per cent at 48,490 units as against 49,225 in the same month previous year.

"Post the reduction in the excise duty across all segments, the auto industry has seen the level of inquiry going up, but has not witnessed any major surge in sales," M&M Chief Executive (Automotive Division) Pravin Shah said.

He said the company hopes that the buying sentiment will improve and change post the national elections, leading to an increase in demand.

Toyota Kirloskar Motor (TKM), which was impacted by a strike at its Bangalore plant, sold 8,206 units in March 2014 in the domestic market, as compared to 19,452 units in March 2013.

"We started limited operations from March 18, 2014, with the help of our non-unionised team members, majority of whom are supervisors," TKM Senior Vice President (Sales and Marketing),N Raja said.

On the two-wheeler front, Honda Motorcycle & Scooter India (HMSI) and TVS Motor Company posted growth last month.

While HMSI registered 55 per cent increase in sales at 3,92,148 units for March, 2014, TVS Motor Co reported a 16 per cent increase in its domestic sales at 165,482 units in March 2014.

In the interim Budget 2014-15, Finance Minister P Chidambaram had announced reduction of excise duty on small cars, scooters, motorcycles and commercial vehicles to 8 per cent from 12 per cent earlier; 24 per cent from 30 per cent on SUVs; 24 per cent from 27 per cent on large cars and 20 per cent from 24 per cent in mid sized cars.