In what turned out to be a lacklustre festive season for automobile manufacturers, passenger car sales in the domestic market declined 23.8 per cent last month, the sharpest drop the industry has witnessed in over a decade.
According to data available with the Society of Indian Automobile Manufacturers (SIAM) on Wednesday, domestic passenger car sales stood at 1,38,521 units in October, compared to the 1,81,704 units sold in the same month last year.
For the fourth consecutive time, car sales have declined this financial year on the back of rising interest rates, higher fuel costs and disruption in production schedules at the country’s largest car maker Maruti Suzuki India Ltd.
Vishnu Mathur, director general, SIAM, said, “The industry was expecting to grow in the festive season but consumer sentiment continued to remain weak due to frequent increase in interest rates and fuel prices. This is the steepest decline since December 2000, when car sales in the country had dropped by 39.86 per cent.” The Reserve Bank of India raised lending rates by 25 points last month, which is the 13th rise since last March. Petrol prices, too, shot up by Rs 1.80 to Rs 68.64 per litre (in Delhi).
“Typically sales grow by 30-40 per cent during festive season. But the rate rise have deterred consumers, who have already availed of home loans, to increase their outgo in EMIs by investing in a new car,” said Arvind Saxena, senior director, marketing and sales, Hyundai Motor India Ltd. In India, as much as 70 per cent of vehicles are purchased by availing of financing solutions.
The sporadic labour agitations at Maruti Suzuki added to the woes dragging down industry sales numbers. Maruti Suzuki, which accounts for over 40 per cent of sales in the domestic market, could hawk only half the volumes it had reported in sales last October. The company sold 51,458 units last month as compared to the 107,555 units sold in the same month last year.
With three strikes crippling production at its Manesar unit since June this year, MSIL has recorded production loss to the tune of 74,500 units. Revenue losses have mounted to Rs 2,200 crore.
Last month, SIAM had significantly lowered the passenger car sales growth forecast for the current financial year to two-four per cent for the second time, after pegging it at 10-12 per cent in July, as against 16-18 per cent announced at the beginning of the financial year.
Two-wheeler sales increased by two per cent last month to 1,147,621 units from 1,125,052 units sold in October 2010. While motorcycle sales grew 0.7 per cent during the month to 879,883 units from 874,146 units in the corresponding month last year, the scooter segment witnessed a growth of 12.2 per cent at 211,360 units. Hero MotoCorp’s sales increased by 1.2 per cent to 497,105 units. Bajaj Auto posted an increase of 1.90 per cent at 244,503 units.
Sales of commercial vehicles rose by 18.53 per cent to 61,800 units from 52,138 units in the year-ago period. Light commercial vehicle sales grew by 15.34 per cent to 34,776 units from 30,151 units last year. Medium and heavy commercial vehicle sales stood at 27,024 units as against 21,987 units in October last year, up 22.91 per cent, SIAM said. Total sales of vehicles across categories registered a decline of 1.05 per cent to 14,41,594 units in October from 14,56,901 units in the same month last year.
Return to profitability hinges on its ability to secure higher proportion of low-cost domestic coal and lower interest costs