Auto sales skid, Nano sales drop by 85%

The much hyped 'world's cheapest' car Nano has failed to live up to the expectations as it witnessed a massive decline in sales to 509 units in November this year compared to 3,065 units sold in the previous month.

The decline came during the month when the company had asked customers to bring back the people's car to add safety devices to prevent it from catching fire.

While the company had insisted it was not a 'recall', it said that the addition of safety devices, a lesson learnt from some of its brand new Nanos catching fire, was optional.

Addtional inputs: PTI

Even during October this year, Nano failed to enthuse buyers and witnessed only two per cent growth compared to the same month year ago.

Interestingly, Nano's sales stood at 5,520 units in September this year, up 61 per cent from the same month last year.

Even on a year-on-year basis, Nano's sales during November were down by 85 per cent over the same period last year.

In August, the sixth incident of a Nano catching fire since the car was commercially launched in March 2009, was reported in the national capital, three months after a company probe declared the car was "absolutely safe".

Five previous incidents were reported from across the country, including Mumbai, Lucknow, Delhi and near Vadodara in Gujarat.

However, the company witnessed a marginal increase of one per cent in its total sales at 54,622 units the month compared to 54,108 units sold in the year-ago period.

Its total passenger and commercial vehicle sales in the domestic market stood at 50,419 units in November, a jump of one per cent from the sale of 50,114 units in November last year, according to the company statement.

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A sharp drop in sales at Tata Motors - particularly of the Nano small car and popular Indica - and a drop in Hyundai's exports by half resulted in overall passenger vehicle sales growth skidding to 8.4 per cent in November.

This comes after seven months of scorching 31 per cent sales growth up to October.

The number of passenger vehicles sold in November by the top seven carmakers - they constitute over 90 per cent of all sales - was 203,505, compared with 187,825 in the corresponding period last year.

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Tata Motors reported a 28 per cent drop in domestic sales at 16,365 vehicles in November, with most models taking a major hit.

Worst off was its Nano small car, whose sales dropped by a staggering 85 per cent over last year. Only 509 Nanos were sold in November.

Analysts say Tata's announcement inviting customers to bring in their cars for retrofits to safeguard against fire was one key reason for the poor sales figures.

In October, Tata had sold 3,650 Nanos. Indica sales fell by 37 per cent to 5,716 vehicles, while the Indigo range recorded only a marginal increase.

To a question as to why Nano sales dropped so precipitously, the company hinted at the fact that open sales of the vehicle were limited to only five states through most of November.

"Sales of the Tata Nano in states where we have begun open sales are increasing every month," a company official said.

The country's largest exporter of passenger cars, Hyundai Motors, saw a staggering 52 per cent downturn in overseas shipments (it sold only 13,002) in November.

As a result, the company recorded a 19 per cent decline in overall sales. This, despite the fact that domestic sales grew by 12 per cent in the month.

Arvind Saxena, director (marketing & sales), Hyundai, said, "Spurred by festive season demand in November, HMIL continued to maintain steady growth in the domestic market, although we were constrained because of a maintenance shutdown at both our plants. In December, we expect the market to continue its growth trend."

However, the company has been seeing a steady fall in exports because its key European market has not rebounded.

The only good news came from Maruti Suzuki India, which sells one out of every two passenger cars in the country.

It saw a healthy growth in overall sales, which went up by 28 per cent in November despite a 12.2 per cent decline in exports.

Domestic sales rose by 34.2 per cent to 102,503 units. This is the sixth time the auto major has crossed the 100,000-mark in sales this fiscal.

"I don't see the export market - especially Europe - reviving this year. So, we have been shifting to newer markets. But the domestic market has been booming, so we have nothing to complain about," said R C Bhargava, chairman, Maruti Suzuki.

Abdul Majeed, India leader, automotive practice, PricewaterhouseCoopers, said, "October is a festive month, so sales usually come down in November. The export market is not exciting, as Europe is yet to see sustainable recovery."

"The cumulative sales numbers have been good so far, but going ahead there will be moderation in the growth rates the industry has been registering. While consumer confidence stands high, there could be a liquidity squeeze in the economy because of inflation, which may affect auto sales," he said.

"There may be some dips over the short term, but the revised growth target of between 18 and 20 per cent as indicated by Society of Indian Automobile Manufacturers is likely to be achieved," he added.

Mahindra & Mahindra reported a 12 per cent growth in passenger vehicle sales at 12,323 units in November.