Saturday January 3, 02:34 AM

Source: Indian Express Finance

Despite discounts, auto firms suffer big losses in December

By ENS Economic Bureau
It did not prove to be a merry Christmas or a happy new year for domestic auto giants who despite a plethora of discounts in December could not rescue their flagging fortunes and who with the exception of Hyundai all closed the year with major losses. Passenger car market leader Maruti Suzuki closed a quarter which has brought them only negative growth by managing to sell only 51,612 units over the 58,090 units sold in the December of last year - an 11.20 per cent decline. However when one judges Maruti, one must give due consideration to the fact that in pure number terms it continues to outsell its nearest competitor Hyundai by nearly 3 times. Hyundai rebounded after its first month of negative sales since the onset of the credit crisis in November with an aggressive discount strategy that paid off for them. The company sold 15,602 units in December 2008, a 19.30 per cent increase over December 2007 when they sold only 13,078. Tata Motors (TATAMOTORS.BO : 575.65 6.2) on the other hand, the third largest producer of passenger vehicles will be only too glad to see the end of a year that has not seen them grow in terms of sales since July 2008 despite the moderate success of the Indica Vista. They rounded off two successive quarters of negative sales with a crushing 31.30% decline in sales selling only 9,838 vehicles last month against 14,316 vehicles during the same period in 2008. The two-wheeler segment, bogged down by the enduring lack of financing and credit availability and being an already highly competitive market unable to really cash in on the December discount season by more than a few thousand rupees at best fared equally poorly in December. The last quarter of 2008 saw Hero Honda, Bajaj (BAJAJAUTO.NS : 2101.05 0) and TVS record only declining sales figures. Hero Honda who for a time seemed impervious to the vagaries of the economy and now controls 55% of the two wheeler market share, saw its sales plummet from 2,40,532 in Decemeber 2007 to 2,15,931 in December 2008 a sharp 10.2 per cent fall. Bajaj Auto the next biggest company in the segment continued to record over 30 per cent drop in sales as it has all of last quarter. In December 2008, the company sold only 1,19,215 units as against the 1,77,249 units sold in the same period in 2007 a 32.70 percent decline. TVS whose sales figures are also quite formidable also saw a 8.50 percent decline in sales growth selling only 89,285 units in December 2008 against 97,576 units sold in December 2007. But while these companies may be down they are certainly not out. Each has aggressive marketing and sales strategies up their sleeves for 2009 and will also be releasing a string of new models to woo consumers.