Auto cos, white goods makers in wait and watch mode on prices

Auto makers and white goods manufacturers today adopted a 'wait and watch' stance on effecting an expected hike in prices in the wake of withdrawal of excise duty concessions, even as major car makers Maruti Suzuki, Hyundai and Toyota reported robust sales in December.

The excise duty concessions given in the interim Budget by the outgoing UPA government in February last and extended by the new Finance Minister Arun Jaitley by six months, ceased to be in force from today.

Top government sources said the withdrawal of the lower excise duty on automobiles and consumer durables, including TV and refrigerator, was inevitable in view of the fact that the government had to look at raising revenue and bridging the fiscal deficit targeted at 4.1 per cent of GDP.

The decision not to extend the concession could mean an income of about Rs 1,000 crore in the remaining three months of the financial year.

There was no clarity on whether a notification was necessary but government sources said the concessions were given for a specific time and would automatically cease if they were not extended.

On their part, the auto makers said they were waiting for some time because of lack of clarity on the issue and would decide on hiking vehicle prices soon.

In fact, the manufacturers had talked of a hike even before the government had indicated a few days ago that the duty concessions would not be extended.

None of the car makers, including market leader Maruti, Hyundai, Toyota and Mahindra & Mahindra, announced any change in prices.

"We will study the market reaction and announce the price revision of our products accordingly," Toyota Kirloskar Motor Senior Vice President (Sales and Marketing) N Raja said.

Officials at Maruti also said the company is currently on its year-end holiday and a decision on the price would be taken only when it reopens next week.

Coming out with their sales figures for December, Maruti Suzuki reported 13.3 per cent increase in its domestic sales to 98,109 units as against 86,613 units in December, 2013.
Sales in the compact segment cars comprising Swift, Estilo, Ritz, Dzire rose by 23 per cent to 41,532 units in December this year as against 33,766 units in December 2013. Newly launched mid-sized sedan Ciaz sold 3,731 units.

Toyota Kirloskar Motor (TKM) sold 11,740 units in December 2014, as compared to 10,648 units in December 2013, up 10.25 per cent.

"In continuation of the November upswing, we have registered growth in the domestic and overall sales in December as well. This momentum can be attributed to the year ending," Raja said.

Hyundai Motor India Ltd (HMIL) sold 32,504 units last month as compared to 28,345 units in December 2013, up 14.7 per cent.

On the other hand, Mahindra & Mahindra's domestic sales declined by 7 per cent to 34,460 units last month as against 36,881 units in December 2013.

The company, however, reported growth of 5 per cent in sales of passenger vehicles including Scorpio, XUV 500, Xylo, Bolero and Verito stood at 17,311 units, compared to 16,436 units in December 2013.

"We are happy to have achieved a growth of 5 per cent for our passenger vehicle segment in December with 2014 being an immensely challenging year for the auto industry," M&M Chief Executive Automotive Division and International Operations Pravin Shah said.

The industry, which was showing early signs of recovery, would be severely impacted by the withdrawal of the excise duty concessional rate that would affect overall business sentiment, as it will lead to an increase in vehicle prices, Shah added.

General Motors India reported a 36.56 per cent decline in sales at 3,619 units in December. It had sold 5,705 units in the same month of 2013.

"Demand continues to remain suppressed on account of high interest rates and weak economic fundamentals. The withdrawal of excise duty benefits is also a big jolt for the automobile industry," General Motors India Vice President P Balendran said.

He added: "We don't see any positive movements in the short-term unless the government comes out with some big- ticket announcements in the upcoming budget to revive consumer sentiment".

In the two-wheeler segment, market leader Hero MotoCorp reported a marginal rise of 0.21 per cent in sales at 5,26,097 units in December 2014. The company sold 5,24,990 two-wheeler units in the year-ago period.

Chennai-based TVS Motor Company said its domestic two-wheeler sales stood at 1,57,438 units last month, up 18.67 per cent from 132,664 units in the year-ago period.
Royal Enfield reported a 47.78 per cent increase in domestic sales in December at 28,179 units as against 19,067 units in December 2013.