Vehicle sales Growth Pushing Auto Parts sector in Top Gear

Even as some industrial segments of the Indian economy continued to post a negative or flat growth in August 2009, the passenger vehicle makers have ended the month on a positive note.

Net profits of the car manufacturers and dealers moved up as sales volume of the domestic auto industry continued to grow for the seventh consecutive month in August. Resultantly, the surge in domestic car sales in the said month also brought cheer to the domestic auto components sector, raising its hopes of witnessing an even better performance in the ensuing quarters of 2009-10.

Beginning of the end to recessionary trends

The fifth month of the current financial year witnessed the domestic auto industry post a robust 24% jump in sales despite the volatile global market movements and the persistent recessionary pressures. The consistent surge in domestic car sales since last few months clearly signals that the worst for the auto and allied industries is over.

“The uptrend in auto sales in August 2009 has lifted up the mood of SME auto part makers, who were battling lower sales on account of demand slump in the last financial year. This is a positive sign, indicating that the auto industry is regaining its lost momentum” says Vijay Sarda, a mid-sized dealer of TVS Motors in Nanded, Maharashtra.

The monthly data released by the Society of Indian Automobile Manufacturers (SIAM) reveals that passenger car sales was up 25.59% in August, while sales for motorcycles went up by 25.94% in the same month. Nearly 1,008,702 vehicles were sold in August, as compared to 811,341 units during a year-ago period. If the domestic demand for passenger cars and motorbikes in August are anything to go by, the auto component sector can expect more orders to come their way in the near term.

“Rise in vehicle sales will lead to increased enquiries for small-scale auto part vendors. Moreover, the consistent sales growth will also give a fillip to the vehicle manufacturers and auto component makers to add more capacity in the coming quarters,” saysA Kumar, Proprietor of Yash Auto, a small-sized auto parts dealer in Kolkata.

The current sales trend has also prompted SIAM to make an upward revision in the growth forecast of the auto industry. With surge in sales momentum expected to continue in the coming months, the SME auto component manufacturers can again expect to see good times.

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