Car sales sluggish in June - Views on News from Equitymaster

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Car sales sluggish in June

Jul 5, 2000

The passenger car segment which grew by 56% in FY2000, continues to show reasonable growth rates in the current year. However the segment is facing a slowdown for the month of June'2000 as compared to May'2000. The figures of June'2000 over June'99 however continue to report buoyant growth rates. On the brighter side the mid-sized car segment is showing signs of a pick up in the current year. In the mid sized segment Ford India continues to lead the segment with its brand "Ford Ikon". During the month of June, the company sold 1,728 Ikons. This is higher than the volume of Hyundai Accent and Maruti Esteems sold during the month. On month on month basis for June'2000, the Ford Ikon reported an increase of 2% YoY. The pick up in the mid sized segment can be attributed to the surge in the small car segment over the past year. This is due to the fact that consumers who already own a small car could in future upgrade their preferences and consider investing in a mid sized car.

Car sales for the month of June
June'99 June'2000 % change
Maruti Udyog 23,469 14,715 -37%
Indica 3,576 4,085 14%
Daewoo Motors 2,584 4,702 82%
Hyundai Motors 4,634 6,116 32%
Ford (Ikon) NA 1,728 -
Honda Siel Cars India Ltd* 750 801 7%

Car sales for the month of June'2000 over June'99 continued on a buoyant note. Daewoo Motors lead the pack with a 82% growth in sales, followed by Hyundai Motors and Indica. However Maruti Udyog continues to see a decline in volumes and market shares, as sales of Maruti 800 continue to drop. The company's recent decision to cut prices is unlikely to boost sales, as competitors have new models and established their brand names.

Car sales for the months of May & June
May'2000 June'2000 % change
Maruti Udyog 25,765 14,715 -43%
Daewoo Motors 6,033 4,702 -22%
Hyundai Motors 7,561 6,116 -19%
Ford (Ikon) 1,697 1,728 2%
Honda Siel Cars India Ltd* 903 801 -11%
Fiat India Ltd 1,101 NA -

The sales of passenger cars in June'2000 have however reported a decline over May'2000. The growth in May'2000 YoY was also on a lower base in May'99 as compared to June'99. This sluggishness could be due to the recent decision of the government to impose a uniform sales tax which has resulted in an increase in prices of passenger cars in the New Delhi and some other states. This however is not a huge concern as it would affect the sale of passenger cars only in the short term.

The passenger car segment should continue to report good growth in the current year due to lower interest rates, availability of attractive car finance schemes, improvement in the economic scenario and pick up in the second hand car market due to professional advice available in this segment now.

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