Meanwhile, truck sales which are more closely linked to overall economic performance continued to show big declines over last year. Total truck and bus sales in the medium and heavy duty segment fell a massive 51 percent to just over 13,000 units and are not expected to pick up pace until the economy as a whole starts to recover. Motorcycle sales also jumped 15.6 percent to 491,462 units during the month, thanks to increased demand from rural markets, which have seen a good harvest this year and hence are cash rich at the moment.

According to Dilip Chenoy, director general, Society of Indian Automobile Manufacturers (SIAM), “While some finance has started flowing into the market, it is still not very significant in segments like two-wheelers and commercial vehicles, with most of the focus being on passenger cars. However, the February numbers show that financing and the recent excise duty cuts has helped sales.” He added that March sales would remain challenging for the industry. The increased availability of cheaper credit has been spurred by the State Bank of India, which cut rates to 10 percent on auto loans in a bid to stimulate demand.

SIAM reports that overall production in February 2009 grew by 6.1 percent over the same month last year, while the cumulative production from April 2008 to February 2009 showed a growth of just 2.65 percent over the same period in the previous year. Total passenger vehicle sales during first 11 months of the fiscal year were almost flat with 1.38 million units sold, representing a growth of just 0.28 percent. Passenger cars and multi-purpose vehicles grew by 1.35 percent and 7.01 percent respectively during this period. However, sales of utility vehicles actually declined by 7.9 percent. The sales in February 2009 for passenger vehicles, including cars and utility vehicles grew 15 percent over February 2008, with all segments except utility vehicles registering positive growth.

Passenger car market leader Maruti Suzuki reported its highest ever domestic and total sales in February and said that it also registered the highest ever export sales. In February 2009, the company sold 70,625 cars in the domestic market, up 19.1 per cent over the same month last year. Its previous highest monthly domestic sales were 67,005 units, recorded in January 2009.

The new A-star led the sales performance with Maruti exporting 8,565 units to Europe. This is higher than the previous highest export sales of 8,282 units recorded in March 2004. In all, the company sold 79,190 vehicles in February, an increase of 24.1 percent over the corresponding month in the last fiscal year. Maruti arch rival Hyundai Motor India (HMIL) though is cautious about the industry’s prospects in the coming months.

According to Arvind Saxena, senior vice president - marketing and sales, HMIL, “While January 2009 sales growth for both the industry as well as Hyundai had been negative, February sales have seen a slight upturn, with double digit growth for the industry. But the overall market situation continues to be challenging and not much should be read into the February growth, as last year in February the Budget was to be announced and a substantial amount of sales were deferred till March. We expect a fairly flat sales growth curve for the industry, for the first quarter ending March 2009”.

According to commercial vehicle market leader Tata Motors, while the financial stimulus announced by the Government, particularly for commercial vehicles, has had a positive impact, the retail market would still take some time to reach the same volumes as last year.

Its February 2009 sales numbers were 15 percent lower compared to last February. Striking an optimistic note the company said its domestic commercial vehicle sales at 23,454 units, were the highest since September 2008, while domestic passenger vehicle sales at 19,039 units were the highest since May 2008. The company’s total sales, including exports, were 43,807 units, which were also the highest in the last four months.

Cumulative commercial vehicles sales, declined by 21.08 percent during April 2008 to February 2009, as compared to the same period last year. While medium and heavy vehicles declined by 31.7 percent, light vehicles dropped 7.87 percent. In February itself commercial vehicles sales fell by 31.68 percent compared to the last year. While medium and heavy vehicles fell 51.33 percent, light vehicles fell by 3.7 percent and medium and heavy buses fell by 20.69 percent while light buses actually grew 18.50 percent.

Three-wheeler sales dropped 5.51 percent in the April 2008-February 2009 period, with passenger carriers growing 13.29 percent, but the overall number was dragged down by goods carriers which dropped a huge 38.63 percent. In February, three-wheeler sales actually grew by 5.06 percent over same month last year.

Two-wheelers registered marginal growth of 2.5 percent during April 2008-February 2009 with mopeds and scooters growing by 3.86 percent and 9.51 percent respectively.

The difficulty in obtaining credit earlier meant that motorcycle sales grew marginally at 0.98 percent, while electric two-wheelers grew a solid 45.24 percent. In February, two- wheeler sales grew at 16.23 percent over the same month last year as more credit flows into the market which has given motorcycle sales a boost.

As for exports, the April 2008–February 2009 period saw a growth of 26.51 percent with all segments except commercial vehicles, registering positive growth.

The passenger vehicles and two-wheeler segments grew by 56.30 and 25.55 percent respectively. Three-wheeler exports grew by 7.43 percent; however, exports of commercial vehicles declined 22.89 percent during this period.

While things are certainly looking up for the industry in some segments like passenger cars and motorcycles, it is still a bit early to say that the industry is on its way to a full recovery. Truck and bus sales continue to suffer and things are not expected to turn around in this segment until economic growth starts to pick up again. It’s very likely that the next fiscal year, which commences in April 2009, will be a difficult one for the industry as it struggles to cope with lower demand in some segments.

The two key factors that will continue to impact the industry’s fortunes in the coming months will be the continued availability of cheap credit, and more importantly consumer confidence to keep buying vehicles in the face of gloomy economic news. The industry is also hoping for further incentives from the new government, after the elections are completed in May this year.