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GM India says 2001 car sales lower than target

The Indian unit of General Motors Corp said on Tuesday that the country's slowing economy could pull down car sales below its year 2001 target.

"The car market has not been particularly robust in the last six months and honestly unless the economy picks up it is very hard to predict when the car market will improve," Aditya Vij, managing director of GM India, told reporters at a car launch.

India's overall car sales have fallen six per cent in April-May on the heels of 7.5 per cent drop in the previous year to March.

Analysts had forecast car sales to improve by about 10 per cent after the February budget cut excise duties on cars to 32 per cent from 40, laid conditions for a decrease in interest rates and increased spending on infrastructure projects.

General Motors India sold 4,092 cars in the six months to June, less than half its 2001 sales target of 10,500 cars. The sales included 1,200 Astras in the upper end of the mid-sized car segment and 2,892 Corsas in the lower end of the same segment.

"We expected, for example, when excise duty came down that there would be an impetus and that really has not happened in the quantum that one expected," Vij said after announcing the launch of the Opel Swing, a station wagon built on the Corsa platform.

But a slowing economy and falling industrial production have failed to pull up car sales.

India's economic growth in the last year to March fell to 5.2 per cent from the previous year's 6.4 per cent while industrial production index growth slipped to 4.9 per cent from 6.7 per cent.

"And certainly we were targeting close to 10,000 units and I expect that it won't be substantially lower than that especially after this launch".

Company officials told a news conference that the company expected to sell about 1,000 station wagons in the remaining six months of 2001.

Vij said GM India had still not reached break even volumes which could vary from 12,500 to 15,000 units depending on its product mix. It currently makes six variants of the Astra and eight variants of the Corsa.

General Motors India Ltd is a subsidiary of General Motors Corp and produces the German-engineered Astra and Corsa models at its plant in the western state of Gujarat in which it has invested $162 million.

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