Car sales in reverse gear, fall 9% in June

Eighth month of decline; Siam seeks stimulus package from government

Sluggish economic growth and low demand continued to constrain the automobile industry, with passenger car sales falling nine per cent for the eighth consecutive month in June. The decline has prompted  the Society of Indian Automobile Manufacturers (Siam), to seek a stimulus package from the government for the sector.

With actual sales in the first quarter of FY14 being widely off the mark from growth projections made in April, Siam said segment-wise targets were unlikely to be met, except in the two-wheeler category.

According to the latest figures, domestic car sales stood at 139,632 units in June compared with 1,53,450 units in the year-ago period. S Sandilya, president of Siam, said, “The slow economic growth, high interest rates and fuel prices, high inflation are all affecting consumer sentiments. The government needs to take a re-look and bring a stimulus package for the auto industry, which will help in achieving higher growth.”

Siam is eyeing a stimulus package similar to the one given during the slowdown in 2008-09, in which excise duty on two-wheelers, small cars and commercial vehicles were reduced to 8 per cent. The industry body has not put forward a formal request to the government yet.

Industry volumes were dragged down by Maruti Suzuki, which registered a decline of 7.8 per cent in domestic sales at 77,002 units last month. Sales for the company slid across categories with even best-selling models such as Maruti Suzuki DZire and Ertiga taking a hit. The weaning demand for utility vehicles is also evident in the sales of Mahindra & Mahindra, which fell by 13 per cent to 17,232 units last month.

“Utility vehicle sales have been affected by hike in excise duty to 30 per cent from 27 per cent announced in this year’s Budget,” said Vishnu Mathur, director-general of SIAM.

In the two-wheeler category, while motorcycle sales declined by 9.16 per cent to 799,139 units, those of scooters grew by 15.16 per cent to 258,224 units. Total two-wheeler sales in June 2013 declined by 4.56 per cent to 1,116,424 units from 1,169,741 units in the same period of the previous year.

“With 50 per cent of the two-wheeler sales coming from rural areas, we hope the monsoon, which is average or above average so far, will have a positive impact on sales,” said Mathur. According to Siam, commercial vehicles sales declined by 13.5 per cent to 56,197 units from 64,928 units in the year-ago period. Overall, vehicles sales across categories registered a fall of 5.10 per cent to 1,407,767 units in June 2013, against 1,483,443 units in June 2012.