Excise duty revisions improve auto sales marginally in February

Car sales during the month of February 2014 saw a marginal increase to the tune of 1.39% following excise duty cuts being offered by the Finance Minister in his Interim Budget. While four wheeler sales increased, the same could not however be said for two wheeler sales.

While excise duty cuts brought some amount of good cheer to the auto industry, it was rising fuel prices, higher interest rates and a flagging economy that made only a trivial impact on auto sales during the past month. In India, vehicle sales are reported taking into account dispatches from factories and not on actual sales. It may hence be mentioned that there are still several automakers that have piling stocks at their showrooms though these are included in monthly sales.

cars-in-IndiaDuring February 2014, Maruti Suzuki sold a total of 99,758 units, a 1.80% increase as compared to 97,955 units sold in February 2013. Sales of Hyundai Motors also increased marginally by 2% while Honda Cars India reported a two fold increase in domestic sales to 14,543 units in February, boosted by launch of new City of which the company sold 7213 units during the month.

Ford India sales were up 51.42% from 4490 units sold in February 2013 to 6799 units in February 2014. SUV makers Mahindra & Mahindra saw domestic sales dip 11.39% YoY with just 39,338 units sold in the past month as against 44,399 units sold in February 2013.

The commercial vehicle segment was also not as positive during the last month due to low investment in new industrial and infrastructural projects following a weak economy. Commercial vehicle sales have dipped drastically in the past two years and fell 30% in February to just 47,982 units during the month.

“It seems that government incentives have had some effect on passenger car sales, albeit a rather small effect so far. Commercial vehicle numbers, on the other hand, indicate that the urgent need to fix the basics of India’s economic model has not abated. This will be the key task for the incoming government, decisive action on the part of the new government will lead to an improved situation over the next 12-18 months,” said Dr. Wilfried Aulbur, Managing Partner, Roland Berger Strategy Consultants.