Domestic car sales stay in slow lane

Sales of passenger vehicles in the Indian market are set for a seventh straight month of decline, with high financing costs, increase in fuel expenses and sluggish economic activity keeping customers away from showrooms.

The industry’s overall volumes fell by as much as six per cent in June, as both Maruti Suzuki India Ltd (MSIL) and utility vehicle major Mahindra & Mahindra posted sharp decline in their domestic sales.

Together, nine leading passenger vehicle makers sold 176,031 units in the month, compared with 187,386 in the same period last year.

Industry volumes were dragged down by MSIL, which saw a 7.8 per cent decline in domestic sales to 77,002 units. Its sales slid across categories, with even the best-selling models like the DZire and Ertiga seeing a drop.

While the sales in the premium hatchback category (Swift, Ritz, Estilo) fell 7.2 per cent to 20,996 units, demand for DZire contracted 8.7 per cent to 12,548 units. Sales in the utility vehicle space (Gypsy, Ertiga) — which had remained buoyant despite the downturn in the industry through most of 2012-13 — went down 11.4 per cent to 4,997 units, against 5,638 in June 2012.

The waning demand for utility vehicles was also seen in the sales of M&M — down 13 per cent to 17,232 units. “A depreciating rupee led to a spiral in fuel costs. Coupled with this, high interest rates and an additional excise duty on SUVs further dampened the industry… Going forward, we hope some immediate short-term measures are announced and implemented by the government to bring buoyancy back,” said Pravin Shah, chief executive, (automotive division), M&M.

Tata Motors and Toyota Kirloskar Motor (TKM), too, continued to see a downslide, losing volumes 31.5 per cent (to 11,804 units) and 25.1 per cent (to 11,010 units), respectively. For General Motors, sales declined 10.7 per cent to 6,575 units. “The overall weak economic conditions continue to keep the market sluggish and sentiments low… We hope to see the market improving after the monsoon and during the festive season,” said Sandeep Singh, deputy managing director and chief operating officer (marketing & commercial), TKM.

The sales of Korean auto major Hyundai Motor India Ltd grew one per cent to 30,610 units. Rakesh Srivastava, senior vice-president, (sales 7 marketing), HMIL, said: “In these challenging times of degrowth in the industry, Hyundai has grown in volumes and market share on the strength of a strong product portfolio and customer focus of its channel partners.”

New launches Amaze and EcoSport helped Honda and Ford post strong growth in volumes. While Honda Cars India’s sales nearly tripled to 9,297 units, volumes for Ford went up 14 per cent to 7,145 units.

“We are extremely delighted with the consumer response to the Amaze, which has surpassed all expectations and is gaining momentum. We already have more than 18,000 happy Amaze customers and we hope to add many more,” said Jnaneswar Sen, senior vice-president (marketing & sales), Honda Cars India.