Auto sales in January grow on low base effect, recovery in rural markets

New Delhi: Vehicle sales rose in January from a year earlier, boosted by a low base in the year-ago period because of the impact of the government’s decision to withdraw high-value banknotes in November 2016.

A recovery in demand in rural and semi urban markets also aided vehicle sales.

Maruti Suzuki India Ltd, the country’s largest vehicle maker, reported a 5% increase in dispatches to 140,600 units on the back of high base last year because of demand for its Baleno (premium hatchback) and Vitara Brezza (a compact SUV) models. The company’s dispatches of cars to dealers were, however, affected by a shutdown in some of the company’s plants for yearly maintenance.

Sales of Alto and Wagon R fell 12.2%, while those of its compact cars—Baleno, Dzire Swift and Celerio—increased by 21.6%. The increase in taxes on hybrid vehicles and the introduction of the new Verna (a midsize sedan) by Hyundai Motor India Ltd led to a 22.5% decline in Ciaz (a mid size sedan) sales.

Utility vehicle sales surged 26.8% in January, led by demand for Vitara Brezza.

The country’s second largest carmaker Hyundai Motor India registered a 8.35% increase in sales to 45,508 units. Mumbai-based Mahindra and Mahindra (M&M) reported a 17% growth to 23,686 units.

On the back of demand for its hatchback Tiago and compact SUV Nexon, passenger vehicle sales of Tata Motors Ltd increased by 55% to 20,055 units. On the other hand, Japanese carmaker Honda saw its sales volume decline by 4.8% to 148,383 units.

Improving macro-economic environment, easy availability of finance options by financial institutions and lower base in the corresponding period have resulted in continued growth in sales of heavy vehicles.

Tata Motors reported a 13% increase in volume to 12,804 units. Chennai-based Ashok Leyland also saw wholesale volume increase by 13% to 13,643 units during the period.

In two wheelers, Honda Motorcycles and Scooter India Pvt Ltd (HMSI) reported a 33% increase in sales to 517,732 on the back of a huge 40% rise in scooter sales.

TVS Motors saw domestic sales increase by 31.9% in January on the back of 22% growth in scooters and 63.7% increase in motorcycles sales as a result of recovery in executive and economy segment motorcycle sales and healthy response from its new product Apache RR 310 in the premium segment.

“Maruti sales were a little bit subdued due to the plant closure while its encouraging to see other vehicle makers report healthy growth despite the price increases. This shows the strength in the Indian market. The sales numbers are in line with our expectations,” said Anil Sharma, principal analyst, IHS Markit.livemint