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Plant shutdowns hit vehicle sales

Domestic sales of passenger vehicles saw their first decline since October last year, falling 0.5 per cent in June although Hyundai and Tata Motors posted growth.

Sales of two-wheelers turned positive with a growth rate of 3.6 per cent, helped by a 14 per cent jump in scooter sales, data released by the Society of Indian Automobile Manufacturers (Siam) showed.

Projecting a rise in demand, Siam President Vikram Kirloskar said the June sales were affected by plant shutdowns. “Three major car makers had shut their factories for annual maintenance. That has resulted in this minor fall. Retail sales have been moderate but car dispatches from factories affected overall industry performance in June,” he said.

During the April-June quarter, sales of passenger vehicles increased by over six per cent to 653,302. Car sales grew 8.6 per cent while utility vehicle sales declined by 0.57 per cent. Utility vehicle sales, affected by uncertainty in the rural economy, declined by close to six per cent in June and car sales grew 1.5 per cent.

“We are not able to see sustained demand this year, mainly due to lack of significant growth in the economy. The major challenge for automobile makers is subdued demand in the rural economy, mainly on account of a sub-optimal monsoon. Interest rates are also still very high,” said Abdul Majeed, a partner at PwC.

The rural market has also been affecting sales of two-wheelers, especially motorcycles. After two months of decline in April and May, sales of two-wheelers grew 3.6 per cent in June. In April-June sales grew 0.6 per cent.

Kumar Kandaswami, senior director at Deloitte, said the monsoon was better than anticipated at the beginning of the season.

“Ideally, this should help rural demand to grow. The recent economic data is quite encouraging,” he added.

Sales of medium and heavy commercial vehicles increased 21 per cent to 22,184 in June. The April-June increase was also impressive at 23 per cent.

“We hope the growth is sustained since most of this is replacement demand. Light commercial vehicle sales continue to decline,” said Vishnu Mathur, director-general of Siam.

Light commercial vehicle sales declined 10 per cent in June and seven per cent in the quarter.