Two-Wheeler Growth is Bright Spot in Slumping Indian Automotive Market

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--While the sales performance at the lower, two-wheeler end of India's automotive market is looking healthy, car sales on the whole are in the doldrums after rising 30% in the 2010-11 fiscal year. But this has not stopped the country's largest car maker, Maruti Suzuki India (MSI), from announcing that it will invest $715 million to set up a new manufacturing plant in Gujarat by 2015-16. The plant at Mehsana will be set up in phases, with the first phase having an overall capacity of 250,000 units.

MSI has signed a state support agreement with the Gujarat government, which has allocated about 700 acres for the project.

Based on market demand, output from the new plant will be added to the company's output at Gurgaon and Manesar in Haryana. When the new plant is commissioned, total annual production of the company will be 2 million units.

Another auto-making major, Mahindra and Mahindra is also planning a $715 million plant in Tamil Nadu. The project is at an "exploratory" stage with the state government, according to executives. Incentives are being compared with those obtainable in other states.

India's leading two-wheeler manufacturer, Hero MotoCorp, reported its highest-ever monthly sales of 556,644 units in May which was a growth of 11.28% from the same month in the previous year. The company sold 500,234 units in May 2011. The previous record sales were registered in April at 551,557. The company is cautiously optimistic that an expected normal monsoon and resulting good harvest should "perk up" sentiment in coming months.

Another two-wheeler manufacturer, Suzuki Motorcycle India, reported a 21.59% increase in May with sales of 36,746 units, after selling 30,222 units in May 2011.

In the automobile sector, Maruti Suzuki said sales fell 5.9% from the same month in the previous year. Tata Motors saw a 6% increase, Ford's sales fell 14%, and General Motors slid 27%.

Mahindra's car sales rose 27% in May, supported by its all-diesel range. Demand for diesel powered cars has doubled over the past year to about 40% of sales on account of subsidies that price the fuel at about half that of petrol.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.