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Auto sales in July skid on slowdown

August 02, 2008 13:39 IST
The growing impact of inflation on car sales is clearly reflected in the dismal growth in domestic sales of the country's three leading auto-makers - Maruti Suzuki, Hyundai India and Tata Motors - which constitute more than 75 per cent of the car sales.

The companies cumulatively recorded a decline of 3 per cent in July even as they prepare for tougher months ahead with interest rates on car loans going up and an upward revision of prices in the offing with commodity rates on the rise.

General Motors, Mahindra & Mahindra, Honda and Skoda, along with the three auto majors, collectively posted a decline of 3.22 per cent, selling 105,401 units in July as compared with 108,914 units in the corresponding month last year.

Maruti Suzuki saw a 0.6 per cent fall in sales in the passenger car segment - its highest dip in sales in the last 12 months - as demand for its once top selling model M800 dropped by 17 per cent while combined sales growth of models like Alto, Swift, Wagon R and Zen remained flat. The company sold 52,010 cars in the domestic market in July as against 52,315 units last year, according to a release issued by the company.

Ashutosh Goel, auto analyst, Edelwiess Securities, said, "If Maruti Suzuki being the leader in the car segment can record a flat growth then it gives us a clue about the sales of the other players. The next two months are expected to be sluggish."

Korean car maker Hyundai Motor India (HMIL), which registered nearly 40 per cent growth in the   first quarter of this year, recorded a rise of just 0.4 per cent in July selling 15,066 units as against 15,003 units last year in the same month.

Arvind Saxena, senior vice-president (marketing and sales), HMIL said, "It has been a challenging month for the entire industry with the combined effects of increase in interest rates, hike in fuel prices and inflationary pressures affecting market sentiments. A host of negative factors have created a situation in the market where the industry is certainly going to face a slowdown in demand."

Tata Motors posted one of the biggest declines in sales among the top vehicle makers as growth dropped by just under 14 per cent with sales of 14,652 passenger vehicles as against 17,011 units a year ago. The company cited high interest rates and reducing finance availability for the decline.

Mumbai-based Mahindra & Mahindra posted a whopping decline of 16.45 per cent in sales at 12,078 units from 14,457 units. It sells models like Scorpio and Bolero in the UV segment.

Honda Siel Cars India also witnessed the slump in sales as it reported a decline of 4 per cent at 4,339 units as against 4,533 units recorded in the corresponding month a year ago.

Bucking the trend, General Motors posted a growth of 25 per cent in  sales, largely due to a low base. Demand for its models like Spark, which consisted 62 per  cent of the total sales, and Tavera propelled the company to post overall sales of 5,706 units in July.

SkodaAuto India also posted a growth of 83 per cent with sales of 1,550 as compared with 845 units. The growth in sales was assisted largely by the Fabia, which the company launched early this year.

All car makers are set to increase prices in the next few weeks to offset the corresponding increase in input prices. Prices of auto steel, tyres, aluminium and copper have increased significantly in the past few months forcing many of the auto players to jack up prices.

Meanwhile, the two-wheeler segment defied the slowdown, posting a growth 24 per cent at 451,288 units in July as against 363,992 units in the previous year.

Hero Honda, world's largest two-wheeler maker, logged sales of 2.81 lakh, a jump of 40 per cent. Bajaj Auto meanwhile, posted a growth of just 4 per cent in two-wheeler sales at 1.62 lakh units.

BS Reporter in Mumbai
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