Domestic car sales down 10% in April, biggest dip in a year

Uncertain economic conditions continued to take a toll on automobile makers, with sales of passenger cars in the domestic market dropping 10.15 per cent in April on a year ago.

This is the biggest monthly decline in a year and has come despite the government cutting excise duties on passenger and commercial vehicles (CVs) in the interim budget this year.

According to data from the Society of Indian Automobile Manufacturers (Siam), domestic passenger car sales were 135,433 units in April compared to 150,737 units in the corresponding period last year. Sugato Sen, director-general, said: “This is the biggest decline since May 2013, when car sales dropped 11.7 per cent. We are unable to recover from the negative sentiment. We need a trigger to change the sentiment.”

In his interim budget, Finance Minister P Chidambaram had cut the excise duty to eight per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles (CVs); to 24 per cent from 30 per cent for sport utility vehicles; to 20 per cent from 24 per cent for mid-sized cars; and to 24 per cent from 27 per cent for large cars.

 

Sen said these reductions had not translated into a pickup in sales. “Today, even after the cut, the cost of ownership is extremely high. Small car customers are the most vulnerable.” Footfall in showrooms has increased but not turned into sales.

Sen said a sales revival could only happen after a new government comes to power and announces measures to propel economic growth. “The current rate of four-five per cent growth is not enough. For healthy growth of the automotive sector, we need the economy to grow at over seven per cent (yearly).”

While factors such as high interest rates, fuel prices and inflation are still affecting demand, concerns have surfaced over forecasts of a deficient monsoon.

Siam said a rollout of the Goods and Services Tax, implementation of a fleet modernisation programme and greater emphasis on higher economic growth must be on the agenda of the new government.

The country’s largest carmaker, Maruti Suzuki India, registered a 12 per cent decline in domestic sales to 79,119 units in April. Tata Motors’ sales slipped 42 per cent to 10,055 units. Korean carmakers Hyundai Motor India and Honda Cars were among the few to buck the trend and post an increase of 8.8 per cent (at 35,248 units) and 30 per cent, respectively (at 11,040 units).

In the two-wheeler segment, total sales in April grew 11.7 per cent to 1,304,447 units against 1,168,100 units a year ago. Sales of motorcycles last month grew 8.1 per cent to 911,908 units from 843,909 units a year ago. The scooters segment continued to record strong demand, with sales increasing 26 per cent to 329,680 units.

Siam says CV sales were down 24 per cent to 43,080 units in April. Sen said with the ban on mining lifted, there could be some improvement in this segment.

Three-wheeler sales during the month declined 2.2 per cent to 33,602 units against 34,348 units a year ago. Overall sales of vehicles across categories rose seven per cent to 1,569,670 units from 1,467,472 units a year ago.