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Car sales continue to boom

Mar 29, 2000

Car sales jumped up by 62% YoY in February'2000 to 56,569 units over 34,979 units sold in February'99. For the period from April'99-February'2000 passenger car sales are up 56.9% YoY to 565,000 units from 360,000 units over the corresponding period. The main driver to sales volumes has come from the premium small car models. In the last year car sales have shown a buoyant growth mainly due to availability of car finance at lower rates, newer models and a pick up in the economic scenario.

The growth is attributed to small cars like Matiz, Santro, Zen which have enjoyed buoyant sales growth over the last one year. In comparison to car sales, commercial vehicles grew by 26.6%, while two wheelers grew by only 11.04% during April'99-February'2000.

In the two wheeler segment as motor cycles continue to eat into the pie of scooters, the sale of scooters showed a decline of 4% over the same period. This can be attributed to a surge in rural incomes as the agriculture sector performed well last year and demand of motor cycles is higher in rural areas.

The market leader Maruti Udyog's sales grew by 22% to 355,000 units, however its market share fell to 62.9% in April'99-March'2000 from 80.7% over the corresponding period. Hyundai and Daewoo recorded impressive sales growth of 405% and 279% respectively over this period and sold 67,470 and 34,002 cars respectively.

Hyundai's market share over this period was 11.9%, Telco's was 8.6% and Daewoo's was at 6%.

Over the last year the competition in the small car segment has gone up considerably with the entry of Indica, Santro and Matiz. Maruti had come up with promotional measures and reduced the prices of its models to counter the competition.

It has also given the Indian consumers more choice in the small car segment and made the market more competitive in terms of features provided, pricing and newer models.

Market View:
The two listed car companies are Telco and Daewoo Motors. Daewoo Motors has not been in favour of analysts due its losses which are a result of its high fixed costs. Analysts are positive on TELCO, however most of them have rated it as a long term "BUY", mainly because the car division is a drag on the company's profits.

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