Auto sales continue to remain on fast-track in India

Automobile manufacturers have ended the third quarter of this year with substantial increase in vehicle sales over the same period last year. However, rising input cost is a cause for concern. Manufacturers have started hiking vehicle prices to compensate for the raw material price increase.

The industry’s performance in the third quarter comes on the back of strong second quarter sales. Despite worries in the form of inflation, rising interest rates and input costs, manufacturers are confident of ending the financial year with a strong growth in vehicle sales, much higher than what they had predicted or anticipated at the beginning of the year.

Car market leader Maruti Suzuki, which commands nearly half of the passenger car market, registered a 28 per cent increase in vehicle sales in the October-December 2010 period over the same period in the previous year, while two-wheeler leader Hero Honda Motors posted a 29 per cent growth in vehicle sales.

According to Venu Srinivasan, Chairman and Managing Director, TVS Motor Company, rising input cost is just one aspect, the other issues being inflation and increasing interest rates.

The industry is still optimistic and expects 12-15 per cent growth in bikes and cars next year. “Cautious, but not worried at this point in time,” is how he put it.

The significant developments during the quarter included the Hero group announcing that it will be buying its partner Honda’s 26 per cent stake in the joint venture and Mahindra & Mahindra signing a definitive agreement to acquire SsangYong of Korea.