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India Q1 car sales flat; small cars preferred

India's domestic car sales in the April-June quarter inched up a mere 0.5 per cent from a year earlier, as the crowded field of 12 automakers now selling cars here struggled to revive sales in the face of a sharp slowdown in economic growth.

Reflecting growing caution toward spending, sales of cheaper models made by companies like domestic giant Maruti Udyog Ltd and Korean automaker Hyundai Motor jumped as buyers spurned more expensive models made primarily by foreign carmakers like Ford Motor Co and General Motor's Opel unit.

Sales of small, low-priced cars increased 12 per cent, rebounding from a 23 per cent decline in the previous year, figures compiled by industry show.

But sales in the B-segment comprising mostly hatchbacks priced at between Rs 300,000 and Rs 500,000 fell nearly 8 per cent, while sales of more expensive mid-sized cars crashed 20 per cent, the data showed.

Sales of the higher priced mid-sized cars had grown about 30 per cent last year.

Small cars with 800cc engines accounted for a third of total car sales of about 139,000 in the April-June quarter.

The B-segment of premium small cars, with engines up to 1.0 litre, made up 52 per cent of total sales.

Mid-sized cars that retail at over Rs 500,000 made up the rest.

India's domestic car sales fell 7.8 per cent in the past year to March to 567,734, after rising 60.1 per cent the previous year.

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

But a slowing economy, falling industrial production and a poorly performing stock market have dampened demand.

India's economic growth in the past year to March slowed to an estimated 5.2 per cent from 6.4 per cent the previous year, while growth in industrial output slipped to 4.9 per cent from 6.7 per cent.

June rescues the quarter

Sales in the April-June quarter of the current year were mostly rescued by a 42.3 jump in June sales, inflated by the previous year's low base. Domestic car sales had fallen 18.8 per cent in April and risen just 1.5 per cent in May.

Industry sales had slid 10.4 per cent last June due to price increases linked to higher state taxes and introduction of a more expensive emission reduction technologies.

Sales of market leader Maruti crashed 38 per cent then, and rose 16 per cent in the past quarter, reflecting the improvement in the small-car segment.

The firm, in which the Indian government and Japan's Suzuki Motor Corp each hold 50 per cent stakes, dominates India's small and premium small-car segments. Overall, it had a 58 per cent share of Indian car market in the past year to March.

Sales of second-ranked Hyundai Motors' rose 13 per cent in the past quarter, reflecting the popularity of its low-price Santro small car.

Daewoo Motors' sales plummeted 56 per cent the past quarter. Analysts said the drop reflected concern over the future of its troubled parent from which it sources parts and components.

Sales of Tata Engineering and Locomotive Company Ltd, part of the Tata group, India's second-largest conglomerate, fell 11 per cent.

Sales of Ford India, a leading mid-sized car maker, dived 23 per cent, the data showed.

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