Budget 2017: Auto industry optimistic of robust growth

CHENNAI/KOLKATA/NEW DELHI: January 2017 proved a mixed bag for the Indian automotive industry as some manufacturers reported higher sales numbers while some reported flat or lower sales.

However, automakers and analysts are optimistic on budgetary announcements aimed to boost the sector.

“Focus on rural economy and infrastructure are two big positives. Continued focus on infrastructure with an outlay at Rs 3.96 lakh crore would be a positive for the commercial vehicle industry,” said Subrata Ray, Group Head, Corporate Sector Ratings, ICRA Ltd.

“The reduction of income tax for companies below Rs 50 crore is a positive, though the industry would have expected some relief on corporate tax for larger entities as well,” he added.

Guillaume Sicard, President, Nissan India Operations, said the income tax rate cut by five per cent to 5 per cent for individual taxpayers earning under Rs 500,000 will create positive sentiment among first-time small car buyers.

Meanwhile the country’s largest carmaker Maruti Suzuki India opened the year by selling 144,396 units last month, up from 113,606 units sold during the corresponding month last year.

For January, the company’s domestic sale was up 25.9 per cent to 133,934 units from 106,383 units.

Similarly, exports surged by 44.8 per cent with 10,462 units shipped out, up from 7,223 units sold abroad in January 2016.

The second largest carmaker Hyundai Motor India Ltd. too logged higher sales number with 51,834 units last month, up from 44,230 units sold in January 2016.

“The Union Budget will give boost to the economy, especially rural, with focus on infrastructure creating a robust business environment and thus helping the auto industry and positively contributing to GDP (gross domestic product),” Rakesh Srivastava, Senior Vice President, Sales and Marketing, said.

Similarly, Nissan Motor India’s domestic sales last month went up to 4,346 units from 2,668 sold the same month a year ago.

The company’s two brands – Nissan and Datsun – together recorded 63 per cent year-on-year growth.

Commercial vehicle major Ashok Leyland sold 14,872 units in January 2017 — up from 13,886 units sold in the corresponding month of 2016.

On the other hand, Tata Motors passenger and commercial vehicle total sales (including exports) were at 46,349 vehicles, a decline of one per cent over 47,035 vehicles sold in the same month last year.

The company’s domestic sales of commercial and passenger vehicles for January 2017 registered flat growth at 41,428 units, over January 2016.

Likewise, one of India’s leading SUV manufacturers, Mahindra Mahindra Ltd (MM) sold 39,303 vehicles in January compared to 43,789 vehicles during January 2016.

“The auto industry continues to see mixed reactions and some of the segments including the rural market and the commercial vehicles category continue to face challenging times,” said MM’s President and Chief Executive (Automotive) Pravin Shah.

He said: “Going forward we expect the announcements made at the budget will positively impact the economy and also the industry, especially in view of the emphasis and the allocation made for rural, agriculture and infrastructure. We are confident that this will lead to a spur in demand.”

Toyota Kirloskar Motor reported 21 per cent increase in sales for January at 10,336 units.

In the two-wheeler segment, Eicher Motors sold 59,676 units last month, up from 47,710 units sold in January 2016.

Similarly, Honda Motorcycle and Scooter India reported a total sales of 389,486 units last month compared with 378,689 units in January 2016.

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