Battered auto cos pin hopes on festive sales

BY YOGESH MEHENDALE

Mumbai

Aug. 11: The automobile companies are looking forward to the festive season to increase their sales.

In spite of offering discounts and various schemes, passenger car sales declined in the month of July. Though auto companies could marginally increase their sales riding on the festive season, they will not see much buying support on the bourses, said an industry analyst.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales declined by 1.71 per cent in July 2008 to 87,724 units from 89,250 units in the same month last year. For the first time in the last two and half years the segment has seen a monthly decline on year on year basis. The decline in the sales was attributed to high fuel cost and higher interest rates.

"We are launching ‘A Star’ a new Compact car in October 2008 as we announced it in January 2008. Also we are offering discounts and launching the schemes for all the products. This will help us to achieve larger volumes in the passenger segment," said the spokesperson of Maruti Suzuki. The company is also counting on the exchange offers. In the financial year 2007-08, the company purchased one lakh cars and replaced them with 80,000 new cars. According to the company spokesperson, a second-hand car sale through 280 True Value outlets is increasing by 15 to 20 per cent per year.

Hyundai Motors official also expressed concerns over declining sales. He said that "higher interest rates have had an impact on sales and high input costs have reduced the margins as well. To minimise the burden on the customers, the company has adopted a policy of 15 per cent discount and an insurance discount," he said.

According to an industry analyst, auto companies may perform slightly better in terms of sales figures, but if the reduced margins are to be considered the stocks of those companies may not get buying support. Though stock prices of auto companies may not decline they will also not shoot up too much, he said.