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India's 2000/01 car, commercial vehicle sales fall

India's vehicle sales fell in key segments in 2000/2001 with only motorcycles showing robust growth and analysts said an uncertain economic outlook clouded future prospects.

Overall commercial vehicle sales slid 12.3 per cent in 2000/01 (April-March) while car sales dropped 7.5 per cent dragged down by a slowing economy, figures released on Tuesday by the Society of Indian Automobile Manufacturers showed.

The economic downturn has hit the commercial vehicle industry hardest. Sales of medium and heavy commercial vehicles, used to transport bulky industrial raw materials, finished goods and agriculture produce plunged 21.3 per cent.

Industrial production growth slowed to 5.1 per cent in the 11 months to February from 6.5 per cent a year earlier. Economic growth slowed to 6.0 per cent in 2000/01 from 6.4 per cent last year.

"The short term outlook is bleak, freight rates have still not picked up. The outlook after is uncertain and a good monsoon would help," Manish Karwa, analyst at Pranav Securities said.

The decline in sales has hit the two commercial vehicle-makers, Tata Engineering and Locomotive Co Ltd and Ashok Leyland Ltd. But sales of light commercial vehicles, used usually to transport consumer goods within cities, bucked the downtrend and grew 4.47 per cent during 2000/01.

Some analysts have said they expected vehicle sales to pick up by mid-year as tax breaks and the growth spur provided by the budget for the year beginning in April begins to kick in.

The Budget cut excise tax on cars to 32 per cent from 40 per cent, laid the ground for an across-the-board drop in interest rates and proposed higher outlays for infrastructure projects.

CUT PRICES

Following the tax breaks, all carmakers announced price cuts of about five per cent in a bid to reverse falling sales.

Sales of market leader Maruti Udyog, a joint venture of Japan's Suzuki Motors and the government, fell 13.4 per cent to 344,463. It finished the year with a market share of 58.3 per cent but expects to post a loss in 2000/01.

The Indian units of Korean car firms, Hyundai and Daewoo, the country's second- and third-ranked car companies, gained at Maruti's expense during the year. Hyundai's market share grew to 14.7 per cent from 11.9 per cent last year while Daewoo's share inched up 7.3 per cent from 6.3 per cent last year.

Analysts said the drop in new car sales looked worse because of last year's unusually robust growth when sales soared 55.8 per cent to 638,792 cars. Sustained growth would, however, depend an improvement in GDP expected from the second quarter onwards.

A Reuters poll of 10 research houses has forecast the Indian economy will grow by 6.3 per cent in 2001/02 (April-March).

Two-wheeler sales during the year have been a mixed bag with scooter sales plunging 28.1 per cent, moped sales falling 5.3 per cent over last year but motorcycle sales rising 20 per cent.

Total two-wheeler sales in 2000/01 showed a moderate fall of 0.83 per cent over the previous year to 3.746 million.

Motorcycle sales in India have surged in recent years due to their greater fuel-efficiency, sturdiness and higher resale value. Its share in the two-wheeler market has nearly doubled over the past six years to 57.6 per cent this year.

That shift has been a boon to Hero Honda, the largest motorcycle maker in India, and a blow to Bajaj Auto, the nation's leading scooter maker. Bajaj is expected to post its worst ever results this year.

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