Car sales high and so are the concerns

Bring on the new models! Thats the motto of domestic car buyers these days as they showed an immense interest in the new high-end segment cars during January 2010.
The industry sales were yet again driven by the enormous growth in higher end car segment - clearly evident by the massive surge in the sales of Toyota Corolla. Though, surprisingly, the consumers have shown an increased appetite for all the three segments despite a considerable rise in automobile prices.
Interestingly, most of the buying has been cash base, a phenomenon that was generally not seen in the past. The banks and the leasing companies are still reluctant to aggressively pursue automobile financing, but that did not bother the consumers who took out the cash for their purchases.
The growth story so far has been led by Corollas New Year model which was well received in the market and is largely reflected in the 106 percent growth in the opening month of 2010 over December 2009. Also, the government has found a new obsession for the companys cars despite the austerity plan, as its increased interest in Corolla cars strengthened the companys sales.
Moreover, a sanguine consumers response to the newly introduced Suzuki Swift resulted in 502 units sold since its launch last month. However, given the relatively smaller price differential with its Cultus and Liana, this may lead to product cannibalization. The initial four to five months would be testing for the countrywide acceptance of 1300cc hatchback model, one of its kinds in the country.
However, the increasing urbanization and higher percentage of youth in the population bode positive for Swifts demand. According to company sources, the latest Swift is targeting the young generation niche - 15 to 35 year of age, 35 percent of population - whereas Cultus is regarded as an executive hatchback and Liana as a family car.
The numbers look good for now, but concerns still remain in place that whenever the euphoria for these new model fizzes out and the high-end buyers are done with their shopping - it will again be back to the low-end segment buyers to decide the industrys fate.
The cause of concern is that the auto financing by banks and leasing institutions is still struggling with little chances of turning positive anytime soon. This certainly will add pressure on the industry as the cash starved low-end buyers already have enough on their plates to deal with.

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AUTO SALES DATA

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Sales units     Jan-10    Dec-09   mom(%)

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Total           10,514     6,176      70%

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Company wise

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PSMC             4,066     3,341      22%

INDU             4,850     2,250     116%

HCAR             1,579       567     178%

DFML                19        18       6%

Mkt.share                      %      chg

PSMC                39%      54%     -15%

INDU                46%      36%      10%

HCAR                15%       9%       6%

DFML                 0%       0%       0%

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