Car sales to drop for 2nd consecutive financial year

Tags: Cars
The passenger car sales in India, Asia’s fourth largest exporter of automobiles, behind Japan, South Korea and Thailand, will most likely see a decline for the second consecutive financial year in more than a decade.

Sales of passenger cars in the first three quarters of FY13 declined 4.92 per cent 1.30 million units from a year earlier. In December, passenger cars’ sales fell 4.52 per cent to 132,561 units while overall automobile sales dropped 1.21 per cent to 1.43 million units.

According to the Society of Indian Automobile Industry (SIAM), domestic car sales in 2012-13 fell 7 per cent to 18,07,011 units from 19,98,703 units in the previous financial year.

“The decline in annual car sales that we have seen in 2013 was the first time after 2002. The negative sentiments have deepened due to the continuation of the sluggish state of the economy,” Vishnu Mathur, director general at SIAM, told Financial Chronicle.

He said high inflation, high fuel prices and high interest rates have contributed to the high cost of ownership and thus affected sentiments. “If there is any improvement in this situation, it will not be before the second half of next year,” Mathur said.

Highlighting the prolonged slowdown, Siam said car sales in India have been in positive territory only for three of the past 17 months — October 2012, August and September 2013.

“The industry as a whole has not yet bottomed out as commercial vehicles are badly hurt due to lack of mining activities and stalled infrastructure projects in the country,” he said. And even when they resume, it would require more than six months gestative period triggering demand for commercial vehicles, he said.

Mathur said during the April-December 2013 period, the auto market witnessed the launch of a total of 22 new car models, 40 new variants and 10 model refreshes, to cheer and to bring excitement in the dull market.

“Domestic auto volumes declined 1.2 per cent year-on-year and 6.2 per cent month-on-month to 1,431,632 units in December 2013, mainly due to 25.5 per cent year-on-year decline in CVs, while all other segment also witnessed year-on-year decline, except scooter segment in the month,” Mitul Shah, senior auto analyst at Karvy Stock Broking, said.

“The major factor contributing to overall decline is due to sluggish economic growth, in addition to high inflation, rising fuel costs and high interest rates put pressure on auto sales,” Abdul Majeed, partner at Price Waterhouse and an expert on auto industry, said.

michaelgonsalves@mydigitalfc.com

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