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Spiralling car loan rates continue to dent the passenger car market, as Tata Motors, Hyundai and Honda Motors reported slower sales in July over that in the corresponding month last year.
Total car sales of the top companies, led by Maruti Udyog, General Motors and Mahindra & Mahindra, grew by 12.72 per cent in July 2007 over the corresponding month in the previous year. However, this was considerably slower than the 18.48 per cent growth in June, which had raised hopes that the market might be getting insulated from the impact of high interest rates.
"We believe that higher interest rates will impact domestic car demand in the first half," said a Mumbai-based analyst, adding, "However, the medium-term prospects look positive for passenger car sales, driven by rising disposable incomes and aspiration levels of the target customer."
Strong demand for the diesel Swift and the newly-launched SX4 has pushed sales of market leader Maruti Udyog Limited by over 18 per cent in July, in the domestic market. MUL sold 52,839 units, as against 44,653 units in the same period last year. The company had registered 25.49 per cent growth in sales in the previous month.
Sales of SX4 and Esteem saw a two fold jump to 4,394 units, as compared with 2,142 units in the previous month.
However, Korean competitor Hyundai continued to loose ground with sales dipping by 7.44 per cent at 15,003 units in July, as compared with 16,209 units in the same month last year. Sales of Santro and Getz also fell by 14 per cent in the same period.
Arvind Saxena, vice-president marketing and sales, Hyundai Motor India, said that "with India gradually becoming Hyundai's manufacturing hub for small car exports, we have stepped up our efforts to deliver huge previous orders for the overseas market this month. Consequently, exports made up a large part of total sales in July."
Tata Motors sales declined by 6.73 per cent with total sales at 17,011 units as compared with 18,238 in July last year. Indica reported a fall of 7 per cent, while sales of Sumo and Safari also declined by 10 per cent during the period.
The company said the domestic market continued to be sluggish due to the high interest rate regime which had affected retails.
Mahindra, however, posted an impressive growth of 62 per cent, selling 14,457 units as against 8,915 units. A substantial portion of these sales came from its new car Logan which was launched some months ago. Sales of the company's utility vehicle segment grew by 30 per cent and it sold 2,890 units of the Logan.
General Motors too registered an impressive growth of 87 per cent at 4,570 units as compared with 2,450 units. A significant number of these was the new entrant Spark, which sold 1,400 units.
However, Honda -- already hit by the new SX4 from Maruti -- again showed a 17 per cent dip in sales in July at 4,533 units, as against 5,461 units sold in the same month a year ago. The company did not provide figures for separate categories, but sources said that City sales dropped significantly during the period.
