Rabin Ghosh 

Mumbai: After showing good numbers in April, auto sales over the next two months are likely to be weak, marketers and analysts said.

“In May the sales are likely to be down by 12-15% since there are no marriage dates. For the entry level bikes, events like marriage season and festival are important. In a scenario when credit for this segment, particularly in rural and semi urban areas, have all but dried up, lack of these days will hurt sales,” said a senior executive of a two-wheeler company who did not wish to be named.

In April, most motorcycles manufacturers registered strong sales numbers. The motorcycle market, which is over 90% of the overall two wheeler market, grew 12% from the same month the previous year and 2% from the immediate past month.

Two-wheeler marketers attributed it to the demand spurt on account of festivals like Gudi Padwa and auspicious dates for marriage.

“There are no major festivals or marriage season coming up over the next two months.We don’t expect much changes in auto volumes till at least September, the beginning to festive season,” Vaishali Jajoo, analyst with Angel Broking said. Jajoo has a cautious view on the sector.

In April, market leader Hero Honda increased sales 9% year on year, but reported a decline of 11% sequentially.

Bajaj Auto sold almost a fifth more motorcycles in April than it had a year ago. That’s almost a third more than March.

However, analysts attribute the sales spurt to base effect (corresponding figure for previous month was low, hence a slight increase on that base looks impressive) and channel push by auto makers.

“…we reckon there has been a build-up in channel stocks across both two-wheelers and cars. Underlying retail sentiment remains weak. We believe that dealers have accepted stocks in advance of the price hikes in April early May as it provides them with a ‘margin’ which can be partially passed on to stimulate sales over the near term,” Jamshed Dadabhoy, and Hitesh Goel, analysts with Citigroup said in their recent report.

Marketers said the credit crunch was limiting two-wheelers sales more than it was affecting the passenger car segment owing to different profiles of customers.

“There is demand in the system but credit crunch is affecting sales. Hence companies such as Hero Honda are talking of setting up their own finance company,” Urmil Negandhi, analyst with brokerage Emkay Shares said.

In passenger cars, market leader Maruti Suzuki’s April domestic sales were up 22% onyear. Tata Motors sold 12% less passenger cars in April than it had a year ago.

“We are sceptical of the strong growth exhibited in the monthly sales across the industry - we reckon that dealers have absorbed stocks given the anticipation of price hikes in May,” Citi’s Dadabhoy and Goel said.

In commercial vehicles, Tata Motors’s M&HCV sales were up 8% and LCV sales were up 6% over April 2007.

“The uptrend in medium and heavy commercial vehicle (M&HCV) sales is a positive sign. I expect the growth momentum to continue for M&HCV and in light commercial vehicles (LCV). For two-wheelers and passenger cars, it is difficult to take a call and would be dependent on new model launches and interest rate environment,” Negandhi said. However, Jajoo said the CV sales were showing no strength and increase in CRR (cash to credit ratio) by RBI would prevent banks from lowering interest rates.

Source : DNA