Car buying frenzy in Feb, thanks to fear of Pranab budget

New Delhi: Fear of what the budget may bring in terms of increased taxes on cars, consumers continued their rush to buy vehicles this February.

The Finance Minister is widely expected to impose a specific levy (which could be as high as Rs 80,000) on diesel cars apart from increasing the overall excise duty by 200 basis points to 12 percent when he presents his budget on 16 March. No wonder then that car makers continued to push more and more vehicles into the system and consumers lapped them up.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales were the highest ever, crossing the two-lakh-unit mark in a month for the first time in February 2012 at 211,402 units (186,890) units.

This euphoria followed equally high sales numbers seen in January at 196,000 units. Even production growth kept pace at 9.57 percent with 2,53,551 units being produced in February against 2,31,399 manufactured in the same month last year.

Imminent price hikes coupled with a positive sentiment - no more interest rate hikes are expected in the near term - led to this growth.

Suprisingly though, car exports recorded a steep decline of over 20 percent to close February at 34,474 units (43,276 units), making this the first month in 2011-12 when exports have taken a beating. An industry expert said the sudden spurt in domestic demand may have caught some large car exporters by surprise and they may have diverted some supplies to the domestic market.

For the April-February period though, car sales growth was flat - 0.31 percent - with 17,86,249 units (17,80,740 units) being sold. Car sales have been down for several months in this fiscal due to interest rate hikes and also because the largest car maker, Maruti Suzuki India,suffered several production glitches over labour issues mid-year. Sales growth was seen only after November, when Maruti begangetting its production back in order.

This February, when overall car sales were rising, some companies still had to deal with slow offtake. Ford’s Figo sold less, at 6,546 units against 7,883 units in the same month last year. Hyundai Motor India’s combined sales of i10, Getz and i20 were down to 15,168 units (21,939 units); Skoda Fabia sold only 916 units (1,466 units). Some other popular models which saw a decline in domestic sales include Chevy Aveo, Maruti SX4, Tata Indigo and Manza and the Ambassador.

The premiumsedan segment also posted a decline, with Fiat Linea, Chevy Optra and Cruze and Suzuki Kizashi selling less than the previous corresponding month. Overall, premiumsedans declined to 3,332 units (4,161 units).