Corporates contribute 35% of car sales

Soaring bottom lines of companies seem to be driving up car sales in the country.

In the first half of 2003-04, car makers recorded a 30-40 per cent rise in institutional sales, while car leasing and rental firms said their businesses grew as much as 100 per cent.

In the first six months of the current financial year, car sales in the domestic market grew 23 per cent, while utility vehicle sales grew close to 40 per cent.

Both these segments recorded just 5 per cent growth in the corresponding period last year. The contribution of institutional and leasing businesses in car sales increased from 10-15 per cent during April-September 2002 to 30-35 per cent during April-September 2003.

Said Gaurav Khurana of General Motors India: "Sales to corporates is on the fast lane. The contribution of corporate sales to total sales in the first half of the year grew to as much as 35 per cent."

According to industry sources, this contribution was around 10-15 per cent in the corresponding period last year.

An executive of Maruti Udyog said the company's corporate and institutional sales grew 15 per cent in the first six months of 2003-04, which was primarily due to heavy buying by companies.

During the period, Maruti won major orders from Reliance, the State Bank of India and its associate banks, Siemens, the Life Insurance Corporation, Larsen & Toubro, Wipro and Air-India, among others.

"It is boom time for the economy, and half-yearly results indicate that companies' profits have risen significantly. We are witnessing a spurt in recruitment by various sectors. A car is a now a standard part of a salary package. With profitability of companies improving, we are finding a distinct increase in purchases by corporates as recruitment goes up. Of course, in percentage terms, the contribution of bigger cars is much higher," says B Mani, deputy general manager (sales), Toyota Kirloskar Motor India Ltd.

The fleet composition of companies is also changing gears. "Companies hardly procure A segment cars any more. While 40-45 per cent of their fleet now comprises B segment cars such as the Santro, WagonR and Indica, 25-30 per cent of it comprises mid-size segment cars like the Opel Corsa and the Ford Ikon. The rest 25-30 per cent of it comprises D segment cars. Earlier, bigger volumes were made of smaller cars. Now corporates want their employees to drive bigger cars," says Christine Sharma, marketing consultant, LeasePlan Fleet Management (India), which leases out new cars to corporates.

In 2002, LeasePlan Fleet Management picked up 20 clients. In the first 10 months of 2003, the company has already bagged 65 clients.

Said Sharma: "What is interesting is that we have been able to get a foothold in public sector companies like Bharat Heavy Electricals Ltd and Power Trading Corporation, as well as private sector companies like Godrej and Nicholas Piramal. This is primarily because there is a feel-good factor in the economy and companies are willing to make the lives of their employees more comfortable."