High interest rates and costlier vehicles hit auto industry growth in January. While passenger car sales fell 12.44 per cent over the month, commercial vehicle sales dropped, by 9.51 per cent.

According to the Society of Indian Automobile Manufacturers (SIAM), 1.73 lakh passenger vehicles were sold in January, compared with 1.98 lakh units in the same month last year.

Total sales of commercial vehicles declined to 63,218 units from 69,865 units in January 2012.

Low Freight volumes

“Customers are still concerned about cost of ownership of passenger cars and the projections for commercial vehicles are also not good because of such reasons as the dip in freight movement by various industries,” Vishnu Mathur, Director-General, SIAM, told Business Line .

“The most significant negative development in the truck market has been the saddling of transport centres with huge inventory of over 2.5 lakh heavy trucks that are awaiting resale and the dip in resale rates for various categories by 30-40 per cent,” said Surjit Arora, auto analyst at Prabhudas Lilladher.

This has led to a crisis in the industry, with truckers unable to generate working capital by selling old trucks, he said. However, the two-wheeler segment grew in January and the industry expects the momentum to sustain, Mathur said.

Two-wheeler momentum

The two-wheeler market grew 8.46 per cent in January, to 12.06 lakh units, up from 11.12 lakh units sold the same month last year.

While motorcycle sales were higher by 7.45 per cent, at 8.86 lakh units (8.25 lakh units in January 2012), the scooter segment grew 12.24 per cent to 2.52 lakh units last month (2.24 lakh units).

Total sale of vehicles across all categories grew 5.31 per cent to 15.61 lakh units in January (14.82 lakh units in January 2012).

ronendrasingh.s@thehindu.co.in

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