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Car sales up, commercial vehicles dip in June

India's vehicle sales fell in key segments in June with only cars and motorcycles showing robust growth but analysts said they expected an improvement in the second half of the year to March 2002.

Overall commercial vehicle sales slid 7.9 per cent in June hit by a slowing economy, figures released on Wednesday 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 agricultural produce, fell 5.19 per cent in June over the same month last year.

India's industrial production growth slowed to 2.6 per cent in April-May compared with 6.5 per cent in the year-ago period. In the last full year to March, growth has dropped to 4.9 per cent from the previous year's 6.7 per cent.

But industry officials have forecast that sales will start picking up in September as India's summer crop, expected to be good, starts being sold and work on industrial projects in several states picks up.

Sales of light commercial vehicles, used usually to transport consumer goods within and around cities over shorter distances, fell 11.49 per cent in June.

"We expect commercial vehicle sales growth to be better in the second half and finish the year with about a five per cent growth," Rajesh Kothari, an analyst at Smifs Securities, said.

India's overall commercial vehicle sales fell 12.3 per cent in the full previous year to March.

Cars jump

Car sales jumped 30.5 per cent in June inflated by the previous year's low base. Industry sales had fallen 7.1 per cent last June due to price increases linked to higher state taxes and the introduction of more expensive emission-reducing technologies.

Year-on-year June sales of market leader Maruti Udyog Ltd, which has a 58 per cent share of the car market, rose 64.4 per cent. Maruti's sales had crashed 34 per cent last June.

Buoyed by June sales, car sales in April-June, are up 3.5 per cent.

Analysts have said they expect the car industry to grow 8-10 per cent after the Union budget unveiled in February 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.

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

Overall two-wheeler sales in June were up nearly 6.0 per cent over June last year helped by a 22.8 per cent jump in motorcycle sales. But scooter sales were down 0.7 per cent and moped sales plunged 29.5 per cent.

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.

Kothari said he expected scooter sales to be better this year with the launch of several low-priced models by Bajaj earlier this year and Honda's entry into the scooter market in July.

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