Auto sales continue to sputter

Country's largest car maker Maruti Suzuki registered a nominal increase of 0.3% to sell 90523 units in April

Demand for passenger vehicles continued to remain weak in the domestic market at the start of the financial year as sluggish economic activity, high financing costs and fuel expenses kept away customers from showrooms.

Nine of the country’s leading passenger vehicle manufacturers together posted a decline of seven% to sell 191,252 units last month as compared to 205,811 units sold in the corresponding period last year.

The country’s largest car maker Maruti Suzuki India Limited (MSIL), which reported its highest ever quarterly profit earlier last week, registered a nominal increase of 0.3% to sell 90523 units in April.

Interestingly, the company which has been struggling to retain volumes in its bread-and-butter small car category for most part of the last financial year sold 34,927 units of M800, Alto, WagonR and A-Star.

This is an increase of 13.7% over the 30,720 units sold in April 2012.

Demand declined for the company in both the premium hatchback (Swift, Ritz, Estilo) and the utility vehicle (Ertiga) categories, which had previously seen record off-take despite the slowdown in the industry. While sales for Maruti Suzuki in the premium hatchback segment dropped by a sharp 17.4% to 21,535 units, that in the UV space slid by 4.9% to 5,318 units.

While sales declined by 7.6% to 32,403 units at Hyundai Motor India Limited (HMIL), the drop was even sharper at Tata Motors where volumes nearly halved last month. Tata Motors sold 11,570 passenger vehicles, which is a decrease of 48.9% over the 22,658 units sold in the year-ago period.

Utility vehicle major Mahindra & Mahindra (M&M), which took a hit due to the increase of excise duty on SUVs in the Budget this year, recorded a marginal growth of 0.9% to sell 20,748 units in April.

Rakesh Srivastava, senior vice-president (sales & marketing), HMIL while  conceding that “the domestic market continues to witness pressure” informed that with the correction in fuel prices there have been some signs of recovery with increase in demand for petrol cars.

But the overall sentiment in the industry still remains muted. “Despite announcing attractive sales offers, the showroom footfalls, enquiry levels and conversion rates remained very poor. We do not expect the market to improve in the short term, as the market continues to remain subdued due to economic slowdown, political uncertainty and various other factors”, said P Balendra, vice-president, General Motors India.

In fact, at Toyota Kirloskar Motor, where volumes plunged by 37% to 9007 units in April measures have been initiated to reduce inventory both at the company and the dealer end. Sandeep Singh, deputy managing director and chief operating officer (marketing and commercial), TKM said, “The market continues to be sluggish and is expected to take some time to revive.”

Bucking the industry trend auto majors such Honda Cars India (HCI), Renault and General Motors managed to swing in a positive sales momentum on back on new products. While Honda grew sales by a strong 20% to 8488 units, at Renault volumes went up ten-fold on a low base and due to robust demand for compact sports utility vehicle Duster.

GM also recorded marginal increase of 2.4% in monthly volumes because of demand for Sail. While Duster contributed as much as 85% to overall volumes at Renault India, Honda Amaze and Chevrolet Sail chipped in 57% and 42% to total sales at HCI and GM respectively in April.