Return to fast lane for auto industry

With the first month of the festival season behind them,sales results for September and the second quarter Q2 of the 2009-10 Financial Year...

With the first month of the festival season behind them,sales results for September and the second quarter Q2 of the 2009-10 Financial Year FY have brought back the smiles on the faces of domestic automobile manufacturers. They are even revising year-end targets. Cumulative sales have doubled between Q1 and Q2 for all passenger car manufacturers. Segment leader Maruti Suzuki is now selling three times as many cars as their nearest competitor Hyundai Motors India Limited HMIL which has replaced Tata Motors as the number 2 car company in the segment with its expanding portfolio.

Maruti Suzuki sold 71,368 units in September 2009,a 11.66 per cent growth increase over September 2008 when they sold 63,917 units. Cumulative sales for Q2 give it a growth of 23.06 per cent,more than double the 9.65 per cent growth of Q1,selling 2,08,311 units this quarter over 1,69,278 sold in Q2 of the previous FY.

HMIL began the FY with a tricky couple of months that saw sales growth in Q1 flatten out to 1.29 per cent. Q2 sees it return to form with cumulative growth of 27.82 per cent for Q2 09-10,having sold 75,397 units while in Q2 08-09 they sold 58,987 units. Sales for September 2009 came to 27,803 units which gives it a 24.62 per cent growth as only 22,311 units had been sold in September of last year.

Arvind Saxena,senior vice president,HMIL,said,If sales remain strong during the coming Diwali,we can look at double-digit growth for the current year.

Tata Motors have had to work the hardest among the top three auto manufacturers to recover from the fallout of the credit crisis. Even in Q1 company sales declined by 10.29 per cent while everyone else managed to grow positively. September sales though not as high as in August,are evidence of a stable quarter and see the company grow by 9.59 per cent,selling 18,176 units in September 2009 over 16,586 in the same month last year. More importantly,cumulative sales too are a healthy 12.59 per cent as the company sold 52,731 units during the quarter against 46,835 units in the same quarter in the previous FY.

While sales for the Honda City have nearly doubled,there seem to be fewer takers for the Jazz each month. Sales in September gave the company a 86.66 per cent increase from 5,794 units sold against 3,104 units in September 2008.

Jnaneswar Sen,vice president,marketing,Honda Siel Cars India HSCI,attributes this to demand exceeding the companys production capacities.

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Nearly all manufacturers confirm they have increased production capacities once again over the past months for the first time since the cutback in December 2008. Sales for the first half of FY 09-10 against the April-to-September period last year also see all major manufacturers with the exception of the Mahindra Logan break even. Maruti Suzuki,HMIL and Tata Motors have registered a growth of 16.17,13.62 and 0.65 per cent,respectively.

HSCI has also grown between April-September 2008 and April-September 2009 by 13.38 per cent. In the two-wheeler segment,Hero has already sold 23,02,222 units in the first six months of this financial year. It had sold 18,66,339 units between April and September 2008,making a year-on-year increase of 23.25 per cent. By its own very high standards,which sees it sell nearly four times as many units as nearest competitors TVS,sales for September 2009 have been weak,growing by 4.16 per cent,the company having sold 3,85,262 units last September and 4,01,290 units this September.

This has resulted in a decline in cumulative sales between Q1 when they grew by 25.13 per cent and Q2 where they have grown only by 21.72 per cent. TVS Motors has seen sales in Q2 triple to an 11.79 per cent increase in comparison with sales in Q1 when they increased by 4.53 per cent. 1,32,281 units were sold this September against 1,19,017 last September,an 11.14 per cent growth. Sales for the first half of FY09-10 came to 6,49,720 units,an 8.38 per cent cumulative growth over the first half of FY08-09 when 5,99,477 units were sold.