Millennium Post

Excise duty ‘hike’ puts breaks on high car sales growth in Jan

Tata Motors and Honda Cars India were, however, exceptions posting healthy double-digit growth rates during the month.

Maruti Suzuki India’s domestic sales increased by 9.3 per cent in January to 1,05,559 units as against 96,569 units in January 2014. Sales of its bread and butter mini segment cars, including, Alto and WagonR, declined by 7.3 per cent to 35,750 units, while compact segment comprising Swift, Estilo, Ritz and Dzire rose by 7.5 per cent to 45,881 units in January.

The sales of company’s mid-sized sedan Ciaz, which was launched in October 2014, stood at 6,005 units. Rival Hyundai Motor India Ltd (HMIL) saw its domestic sales market grow by 4.1 per cent to 34,780 units last month as compared to 33,405 units in January 2014. HMIL Senior Vice President (Sales and Marketing) Rakesh Srivastava said during the month the industry faced “stiff challenges of increasing cost of ownership on account of increase in excise duties”.

General Motors India reported a 16.01 per cent decline in sales at 4,667 units in January as against 5,557 units in the same month last year. Commenting on the sales performance, General Motors India Vice President P Balendran said: “The withdrawal of excise duty benefits has significantly affected demand during the previous month. High interest rates and weak economic fundamentals continue to put pressure on car purchases.”

Homegrown utility vehicle Mahindra & Mahindra’s (M&M) domestic sales declined by eight per cent to 37,045 units last month as against 40,324 units a year earlier. “The first month of 2015 has not been encouraging as the effect of the withdrawal of excise duty subsidy is clearly evident,” M&M Chief Executive (Automotive Division) Pravin Shah said.

“Unfortunately, the segmented recovery which we were witnessing over the last couple of months has been impacted with the excise duty change,” he added. The government had decided against extending the excise duty concessions given to the auto and consumer durables sectors after the expiry on December 31, 2014 and it led to an increase in excise rates by up to 4 per cent.

Subsequently, auto companies had passed on the burden to customers from January. However, Tata Motors, riding on its new models Bolt and Zest, reported a growth of 18.89 per cent in its domestic passenger vehicles sales in January in the domestic market at 13,047 units, up from 10,974 units in the same month last year.

Honda Cars India Ltd (HCIL) also reported 16.65 per cent increase in domestic sales at  18,331 units in January 2015 against 15,714  units in the corresponding month of last year. On the other hand,  
Ford India reported a marginal decline in domestic sales in January at 6,647 units as against 6,706
units in the same month of last year.
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