Auto India, Car India

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Car industry recorded dip in a sales for 1st time in over 2 and ½ years as the sales in domestic market dropped 1.71% in the month of July as the interest rates, hike in fuel costs dented demand. . Last time decline in the sales occurred in Nov. 2005 when the segment observed dip of 2.3 percent at 68840 units compared with 70468 units in Nov. 2004.

In a passenger car segment, 87,724 units were sold in July’08 compared with 89250 units in same month last year.
Passenger car sales in first 4-months of this fiscal increased by around 11% over the similar period last year. Industry has sold around 500K units this year.

It is for the first time after November 2005 that the passenger car segment has registered a decline that is largely due to cost of finance and its availability.

- MR. Dilip Chneoy (Director General, SIAM) said.

The industry expects that festival season starting September could spot the launches of new models such as the Maruti’s A Star and Tata’s Nano. It could drive customer interest in purchasing new cars.

However, autoanalysts are not that happy. Says Mr. S Ramnath (Analyst, SSKI Securities)

We do not expect the growth to be higher than 8-10 per cent in the car segment for the year. High interest rates and lower buying sentiments will continue to impact demand for vehicles.The situation might improve during October with the festive season setting in, but the outlook for the next two months looks bleak. New offerings will revive sales.

According to Society of Indian Automobile Manufacturers (SIAM), while market head Maruti Suzuki India recorded increase of 1.45 percent at 45,757 units in a July compared to 45,101 units in the similar month 2007, Hyundai Motors sales stayed flat at 15,061 units last month against 14,981 units in same month of year ago. GM’s sales went up 48.7 percent at 4415 units against 2969 units last year.

Tata Motors, however, reported decline of a 8.87 percent at 12012 units compared with 13,181 units in similar month a year ago. Due to major fall in sales of Honda Civic, Honda Siel Cars India also recorded dip of 7.01 percent at 4006 units in comparison with 4308 units in a month of July last year.

The euphoria around excise duty reduction that had helped maintain the growth momentum in the first quarter has waned. High interest rates, high inflation and increase in car prices have lowered the buying power of a large section of people and the impact is now becoming visible.

- MR. Arvind Saxena (Senior Vice-President, Hyundai Motors) said.

Monsoons are generally lean period for passenger cars especially in areas with heavy rain as people tend to postpone their purchase. This July has been worst because of an increase in car prices and the on-going hike in interest rates.

- MR. Jnaneswar Sen (Senior GM, Honda Siel) said.

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