Passenger vehicles in reverse gear, sales fall for eighth month

High financing costs, increase in fuel expenses and sluggish economic activity keeping customers away

Underlining the prolonged slump in the automobile market in India, passenger vehicle sales declined for an eighth consecutive month in July, dragged by high financing costs, increase in fuel expenses, and sluggish economic activity that kept away customers from showrooms.

Though vehicle sales for Maruti Suzuki India, the country’s largest car maker, recovered moderately, nine leading auto makers together reported a drop of seven per cent to sell 168,335 units last month, compared to 181,117 units sold in the year-ago period.

MSIL sold 75,145 units in the domestic market in July, which is an increase of 5.8 per cent over the 71,024 units sold during the corresponding period last year. The growth, however, came on a low base as the company had stopped production at its Manesar facility from July 18 till mid-August 2012. Interestingly, sales in the company’s small car segment grew by 15.8 per cent to 33,587 units. However, best-selling models such as Swift and Ertiga continued to report a drop in wholesale demand.

While sales in the premium hatchback category (Swift, Ritz, Estilo) went down 11.9 per cent, demand for the Ertiga contracted by 37.5 per cent to 4,562 units.

At Korean auto major Hyundai Motor India, volumes fell 5.9 per cent to 25,965 units in the domestic market.

“Volumes are under pressure despite attractive consumer promotion as customer and market sentiments continue to be suppressed. The frequent price increase in the fuel price on account of depreciating rupee has further increased the challenge to grow volumes,” said Rakesh Srivastava, senior vice-president, (sales and marketing), Hyundai.

While sales were down 58.8 per cent at 10,824 units at Tata Motors, volumes at Mahindra & Mahindra (M&M) declined 29.4 per cent at 15,530 units. Pravin Shah, chief executive (automotive division) at M&M, said: “Over the past few months, the auto industry has been going through one of its worst phases of the last decade with planned shutdowns being taken by companies to correct demand-supply mismatch.”

With production halted for the Chevrolet Sail (diesel variant) and Tavera, General Motors registered a decline of 10.7 per cent in wholesale volumes at 6,503 units. The fall was sharper at Toyota Kirloskar Motor, where volumes dropped by 21 per cent to 11,515 units.

New launches Amaze and EcoSport helped Honda and Ford post strong growth in volumes. While sales nearly doubled at Honda Cars India to 11,223 units in July, volumes went up 26 per cent to 7,867 units at Ford.