The Hindu Business Line : Plunge in utility segment dents passenger vehicle sales

New Delhi, June 8 There has been a sharp plunge of 29 per cent in the sale of utility vehicles during May because of lower demand from fleet operators, concerns over defaults, and the cautious approach of the banks to lend.

Since utility vehicles such as Mahindra’s Scorpio and Xylo, Tata’s Sumo and Safari, General Motor’s Tavera and Toyota Innova form a component of passenger vehicles, the sales of passenger vehicles declined 0.79 per cent.

However, another segment, passenger cars, has shown an increase of 2.47 per cent. Maruti Suzuki lead in the car segment. The company’s sales were up by 9 per cent to 62,878 units. Honda Siel Cars also posted an 11 per cent increase in sales at 4,073 units. Few other automakers such as Hyundai and Tata Motors saw their domestic sales drop 4 per cent and 9 per cent respectively.

Stimulus effect

“The situation is still worrisome. The effect of stimulus package is wearing off. Even for cars, financing is still not sufficient for the market to pick up,” said a senior official with the Society of Indian Automobile Manufacturers.

The fiscal stimulus package norm on depreciation of commercial vehicles and the bus purchase programme are yet to translate into major sales for commercial vehicle players. The slow economic growth reflects in the demand for trucks and buses whose sales fell by 37 per cent to 12,181 units in May on a year-on-year basis. Light commercial vehicles, used mainly for intra-city movement, saw a better offtake with sales touching 18,619 units. This is a 11.83 per cent growth vis-À-vis the same month last year.

The official further said, “For commercial vehicles the economy has to grow. Even in case of the bus purchasing programme, companies are not fully geared to supply the low-floor buses as specified by the Government. This will also take 4-6 months time for companies to deliver.”

Two-wheelers

The two-wheeler industry grew at a healthy pace with scooter sales rising 11 per cent at 1.08 lakh units. Motorcycle sales touched 5.76 lakh units, a 12 per cent increase in May over the same period the previous year. Motorcycle sales were spurred by Hero Honda, the largest player whose sales jumped 20 per cent to 3.59 lakh units. In contrast, Bajaj Auto sales were down by 12 per cent at 1.13 lakh units. TVS reported a 3 per cent increase in bike sales at 43,165 units.

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