Tuesday, March 15, 2005

India's car sales drop 4.2% as buyers hope for tax break

Reuters

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NEW DELHI - India's domestic car sales fell 4.2 percent in the year through February, industry data showed on Tuesday, as buyers put off purchases on expectations the government would cut duties on cars and make them cheaper.

However, the federal budget on Feb. 28 failed to lower the excise duty on cars to 16 percent, in line with that on trucks and bikes, from 24 percent.

Car sales in February fell to 62,072 units from 64,819 in the same month of 2004, the Society of Indian Automobile Manufacturers (SIAM) said in a statement.

Monthly sales of nine out of 11 car makers fell during February. Only Tata Motors Ltd., India's No. 2 producer of cars, reported higher sales of 12,671 units, up 29.8 percent from a year earlier.

Hindustan Motors Ltd.'s car sales were flat at 1,363 units.

Car sales at Maruti Udyog Ltd., India's largest car maker that is 54.2 percent owned by Suzuki Motor Corp., dropped to 33,505 units from 34,084 a year earlier. Its total vehicle sales, including vans, grew 3.2 percent.

Ambrish Mishra, auto analyst at Sushil Finance Ltd., said the market was still expecting a cut in excise duty on cars.

"One may not have to wait for next year's budget for that to happen," he said, adding he expected car sales over the next two years would rise 12-14 percent each year.

Rising incomes and finance schemes have been fuelling car purchases in India, Asia's fourth-largest economy.

Car sales in April-February, the first 11 months of the current business year ending on March 31, rose 17.7 percent to 730,425 units from 620,705 a year earlier.

Sales of commercial vehicles, or trucks and buses combined, rose 13.9 percent to 29,407 units in the past month, from 25,825 a year earlier. Sales in April-February climbed 23.4 percent to 282,340 units from 228,889.

The $5 billion truck and bus industry has enjoyed 30 percent annual growth in the past three years, driven by demand to replace ageing trucks to move goods.

Tata Motors, India's largest truck producer, which also makes buses and cars, said earlier this month its total vehicle sales in February rose 20 percent from a year ago.

Motorcycle sales in February jumped 16.9 percent to 425,077 units from 363,655, SIAM added. Sales in the first 11 months of the fiscal year were up 19.1 percent at 4,527,715 units from 3,801,136.

Bike sales in the world's largest market after China have boomed over the past decade due to a shift in buyers' preference to more fuel-efficient vehicles. Poor public transport and a flurry of new launches have also helped.

Hero Honda Motors Ltd., India's largest motorcycle maker that is 26 percent owned by Japan's Honda Motor Co. , said earlier this month its February sales grew 9.3 percent.