Motown snapshot : February 2011

The fear of an excise hike in Budget and the economic growth kept car sales healthy in February despite a slew of negatives like rising interest rates and petrol price hike. Demand is expected to be headed for moderation in the coming months from its high levels earlier, fear industry players. Maruti, the country’s top carmaker, led the charge as it reported a 20% growth in domestic volumes at 1.01 lakh units against 84,765 units in the same month last year. The company, that last month launched a diesel version of its SX4 sedan, said sales of its bread-and-butter small car portfolio was up 19% at 72,090 units. Company officials, however, fear that the bumper demand may not hold up for long with interest rates on the rise and negative sentiments building up due to high inflation and petrol price hikes. Hyundai had another month of subdued performance as its domestic volumes grew 5% at 32,629 units against 31,001 units in February last year. The company's sales were up by a small 2% in January. But while being cautionary on the sales prospects in the coming months, most of the companies heaved a sigh of relief as the finance minister kept the excise duty unchanged at 10% in the Budget. Companies had said that they would not be able to hold on to prices in case the excise duty would go up in the Budget. Companies say they may be forced to up prices in the coming months as rising cost of inputs was hurting margins.

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