With foot on the accelerator, car sales surge 56% - Views on News from Equitymaster

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With foot on the accelerator, car sales surge 56%

Feb 23, 2000

The first 10 months of the current financial year - April-January 2000, have witnessed 56% growth in car sales (volumes). According to reports in a leading financial daily, passenger car sales at 509,000 units in April-June 2000 have jumped 56% over the corresponding period last year (326,000 units). Multi-utility vehicles (MUVs) also grew 4.9% (to 92,976 units), over the corresponding period last year (88,624 units).

Motorcycles with 28.4% sales growth are also in the fast lane, although the same cannot be said about scooter sales, which fell 4.4%. In April-January 2000, scooters clocked sales of 1.08 m units, as compared to 1.04 m units in April-January 1999. Mopeds posted moderate growth with 3.7% rise in sales to 583,000 units, as against 562,000 units last year.

The growth in all the major segments of the auto sector have been on expected lines. Car sales have remained buoyant in the current financial year, on the strength of small car sales and as demand in the small car segment shows no signs of a let-up, car sales will continue to post growth at current levels. With a slew of launches in the mid-sized car segment, this segment is also showing signs of a sustained pick-up in demand.

MUVs are also showing encouraging signs of a demand revival. With the recent trend of MUVs being targeted at the mid-sized car segment (Toyota Qualis), some consumers from the car segment have shifted to MUVs. That is one reason why the Toyota Qualis, priced attractively at Rs 450,000 has proved an unqualified success.

Motorcycles as usual are sustaining growth, just as scooters sales are falling steadily. The shift in consumer preferences towards motorcycles continues unabated, at the expense of scooters. The rise for motorcycles will continue, although it is unlikely that the growth will continue to be as explosive. Scooter sales are also expected to remain at current levels and it is unlikely that they will close the year on a positive note.

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