Car sales grow slowest in 7 months during May at 2.78%

Slowest growth since October 2011 when car sales witnessed a decline of 24%

Car sales in India grew at the slowest pace in seven months during May with industry body SIAM today reporting 2.78% growth as high interest rates and petrol prices continue to hit the market.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in May stood at 1,63,229 units as against 1,58,809 units in the same month last year.

"This is the slowest growth since October last year when car sales witnessed a decline of 23.77%," SIAM Director General Vishnu Mathur told reporters here.

"The softening of interest rates, which was expected to happen has not materialised and continues to be high. Moreover, the high prices of petrol have also affected sales and the overall sentiment in the market is very negative," he added.

Increase in prices of vehicles following the excise duty hike in the Budget has also had a major impact, Mathur said, adding that even diesel vehicles which used to have a lot of demand had tapered off.

"In the premium and executive segment, which are generally considered to be not price sensitive, the demand for diesel vehicles has slowed down," Mathur said.

At such a time, he added, "if the government goes ahead and decides to tax diesel vehicles more, the overall demand will suffer all the more".

In the passenger car segment, market leader Maruti Suzuki's sales dipped by 5.94% to 72,309 units.

However, rival Hyundai Motor India's sales increased by 3.03% to 31,939 units. Homegrown auto major Tata Motors' car sales were up by 6.70% at 17,371 units.

In May, total sales of vehicles across categories registered an increase of 10.52% to 15,13,032 units as against 13,69,070 units in the same month last year.

Total two-wheeler sales last month increased by 11.40% to 11,92,688 units from 10,70,603 units in May 2011.

According to the SIAM data, motorcycle sales in the country grew 7.24% during the month to 8,87,634 units from 8,27,746 units in the same month last year.

In this segment, market leader Hero MotoCorp posted 10.68% jump in sales to 5,02,676 units in May.

However, rival Bajaj Auto's sales went down by 5.30% to 2,06,751 units during the month.

Honda Motorcycle & Scooter India (HMSI) posted a 45.45% increase in sales to 88,334 units, while TVS Motor moved 47,175 units, 14.47% less than the corresponding month of the previous year.

The scooter segment's overall sales grew 34.40% to 2,35,185 units from 1,74,985 units.

HMSI's scooter sales grew by 65.47% to 1,24,123 units in May, while Hero MotoCorp sold 36,312 units, up 24%. TVS Motor's sales saw decline of 2.42 during the month to 34,936 units.

Commercial vehicles sales grew by 9.12% to 62,025 units during the month, from 56,841 units in the year-ago period, SIAM said.

Medium and Heavy Commercial Vehicle sales declined 10.58% to 22,227 units during the month compared to 24,858 units in May last year.

According to SIAM, light commercial vehicle sales grew 24.43% to 39,798 units in May 2012 from 31,983 units in May 2011.

In the three-wheeler category, sales fell by 3.32% to 37,184 units from 35,988 units in the same month last year.