Vehicle sales decline 16% for third month in a row

Observers say market could witness its sharpest decline this financial year in February

Domestic passenger vehicle sales declined for a third month in February with eight Indian car makers posting a combined drop of 15.8 per cent to sell 197,066 vehicles.

While the preliminary numbers are only indicative, as some companies are yet to report their monthly sales data, industry observers say February might have witnessed FY13's sharpest decline.

Market leader Maruti Suzuki, which has been clawing back share since the normalisation in operations late last year, registered a nine per cent drop in domestic sales at 97,955 units. (AUTO SALEs WATCH)

The company continued to record weak demand for its flagship small car models M800, Alto, A-Star and WagonR, with sales in the segment decreasing 16 per cent to 41,311 units last month. Of the 15 models Maruti currently retails, only in DZire and Ertiga did it manage to grow numbers.

Rakesh Srivastava, vice-president (sales and marketing), Hyundai Motor India Limited (HMIL), explained, "The market was suppressed, as there was a drop in enquiries, with lower rates of conversions to purchase. The increase in fuel prices negatively impacted the already low market sentiments. We expect the challenge to continue in the next quarter, until there is a significant change in macro-economic conditions." The Korean auto major witnessed a 7.6 per cent decrease in sales at 34,002 units in February.

The drop in volumes was even sharper at Tata Motors, at nearly 70 per cent. The firm could sell only 10,613 units last month, compared with 34,832 units in the corresponding period last year. The company says it registered combined sales of 7,769 units of small cars Nano, Indica and Indigo �" far lower than the initial expected volumes of 20,000 units a month of Nano alone.

Only Mahindra & Mahindra and Renault India managed to buck industry trend. While M&M's sales increased 14 per cent to 23,421 units, on the back of diesel-powered utility vehicles, Renault rode high on the success of compact sports utility vehicle (SUV), Duster. Renault sold 6,723 units last month, with 83 per cent of the volumes coming from the Duster.

M&M has expressed concern on the imposition of higher levies on SUVs in the Budget. Pravin Shah, CEO, (automotive division), said: "We have a balanced Budget that emphasises inclusive and sustainable growth, which we hope will bring the much needed positive sentiment for the economy, including the automotive industry. However, levying a three per cent higher duty on SUVs on the basis of higher ground clearance is disappointing, as it slows further growth and does not provide equal competitive space to all players."