Spring in Motown

India's car and two-wheeler companies are beginning to believe that summer is finally upon them, convinced that they have seen enough swallows in the form of robust sales data over three months to merit the optimism. With March providing better-than expected sales of cars and motorcycles for the third month in a row, auto firms are overcoming the scepticism, which led them to characterise their performance in January and February as mere aberrations. Total car sales in March are estimated to be 1.40-1.45 lakh units, an increase of 2% compared to the year ago period when there was a sharp sales bump because of the excise duty cuts announced in the budget the previous month. India’s largest carmaker Maruti Suzuki expects sales to have grown by up to 10% last month but its two closest rivals Hyundai and Tata Motors fared worse than they did in March 2008. Auto financiers say the combined effect of discounts, aggressive dealer push as well as increased buying to benefit from higher depreciation during the last month of the fiscal helped sales this March. Furthermore, the reduction in excise duty as part of the economic stimulus package and the excitement over the launch of Tata Motors’ cut-rate small car Nano helped turn sentiment around. The really good news is that retail sales are closely tailing dealer billings and are seen at 1.25-1.3 lakh units in March. But the good performance of the final three months of the April-March fiscal will not help overcome the deficit of the first nine months.