The global economic meltdown has taken its toll virtually on every industry and auto industry is no exception. However, early signs of revival have led to steady rise in auto sales owing to increased consumer demand to buy vehicles, especially during the festive season; therefore, auto firms are all set to make profits. It is expected to report higher revenues and profit for the quarter that ended on September 30. Better financing facilities and lowering of commodity prices have also contributed to higher sales, which in turn have ensured higher profits. The decline in commodity prices between October and December 2008 has been a blessing in disguise for the auto sector.

Data indicate higher growth rate

Growth rates of the leading auto manufacturers in India reflect that the auto sector is on the path of revival. Maruti Suzuki’s sales have increased by 16% during the current financial year. The scrappage schemes on old cars announced by countries such as Germany, Italy and France have further helped Maruti to increase its sales. Similarly, in the September quarter, Mahindra and Mahindra’s tractor sales rose 45.4% to 38,597 units. For the first time, India’s leading two-wheeler company Hero Honda Motors Ltd has sold more than a million units in the latest quarter and its net profit is expected to increase to Rs 539.72 crores. Similarly, Bajaj Auto Ltd is expected to double its quarterly profit to Rs 376.70 crores.

Pramod Bharti, Proprietor of Venkateshwara Auto, a mid-sized auto firm in Pune says, “This is a result of combined efforts on the part of the government as well as the auto manufacturers to provide best options in order to attract customers despite recessionary pressures.” Parsav Kumar Jabak, Proprietor of Mahavir Auto Diagonistics, a mid-sized auto firm in Vizag says, “The rise in sales of automobiles is welcome news for the auto sector and we hope that the sales continue to grow in future.”

The auto index recorded on Monday, October 12, 2009 stood at 6,544.91 points, up by 41.7% since July 1, 2009.

Arup Choudhury