Auto companies' 2010 pleasure ride to halt at weak macro signals

Auto companies ride to halt at weak macro signals
Overall car-sales plummeted to an 18 month low of 7% in May 2011 to 158,817 units from 148,425 units in May 2010.

Luxury-car manufacturers recorded 2 digit growth rates, mass-market cars' sales nose-dived during the month of May with Maruti Suzuki recording a marginal 1% growth to 76,874 units and Tata Motors witnessed a 13 percent decline in May 2011 to 16,280 units. The overall automobile sales in May 2011 grew to 1.37 million units from 1.23 million units, a rise of 10.6%.

These figures pale in front of the 30% growth enjoyed by the automobile industry in 2010. The slump in the recent sales figures may be attributed to the rising fuel prices, higher interest rates and inflation.

Premium car-manufacturer Mercedes-Benz India recorded a growth of 36 per cent over the same period last year by selling 561 units in the month of May 2011 while Toyota witnessed a mammoth five-fold jump in sales at 3,835 units from 710 units in May 2010 owing mostly to the rising demand of its new car Etios.

In the two-wheeler segment, all the big players fared pretty well comparatively. Bajaj Auto and Hero Honda reported sales growth of 13.87% and 13.54% respectively.

In view of continuing interest hikes, rising vehicle and fuel prices and monsoon (which is slow period for car sales anyway) approaching, Society of Indian Automobile Manufacturers (SIAM) may need to bring down its estimated figure for the growth of the automobile industry this year from 12-15% to a realistic, achievable figure.

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