THE reasonably good 12.3% growth in domestic passenger car sales in April-July 2007 provides a stark contrast to the 9.2% drop in two-wheeler sales over the same period. This large difference precludes any sweeping generalisation about consumer demand — automobile sales are considered a good lead indicator of consumer sentiment. However, a closer look at the number offers some explanations for the difference in growth. The company-wise breakdown of domestic sales shows most passenger car manufacturers are struggling to report growth. According to SIAM statistics, with the exception of Maruti, all major passenger car majors have reported lower sales in this period — Tata Motors 55,488 against 56,019; Hyundai 63,609 on 64,187; Ford down to 10,660 from 11,992; and Honda is up only marginally from 17,002 to 17,672. Apparently, only the companies that have had new launches have managed to better the sales numbers. In the first four months of 2007-08, Mahindra Renault has sold over 8,000 units of Logan. Meanwhile, General Motors has managed to sell over 9,500 units of Spark and U-VA. And Maruti has the new SX4 and Zen Estilo to thank for the kicker to sales growth (18% in this period). Minus these new launches it is likely that the passenger car sales growth would have been lower. The script is somewhat similar in the case of two-wheelers. Honda Motors continues to reap the rewards of recreating the scooter market with good products. Its scooter sales are up 33% over this period. Others have done well in some segments but would be down overall because of the 21% drop in the largest two-wheelers category, 75-125 cc motorcycles/step-throughs. Clearly, despite the large difference in growth, the underlying factors driving the passenger car and the two-wheeler industry appear very similar. While some are doing well, a reasonably big chunk is finding it difficult to grow. In commercial vehicles too while the medium & heavy segment is down 4.4%, light commercial vehicles are up 15%. It is no longer the case of rising tide taking everybody along. The consumer sentiment appears to have turned, possibly because of the higher interest rates and inflation over this period. Companies need to work harder in such a market.