Car firms apply brakes on targets as sales dive in Nov

Tags: News
Given the 8.25 per cent fall in passenger car sales last month, automobile makers may lower growth projections for the current financial year. Companies may also reconsider their move to increase cars prices to stem the fall in sales.

The decline in car sales came shortly after automobile makers, including market leader Maruti Suzuki, announced price hike beginning next year. Carmakers cited high input costs as the reason for price hike.

Analysts view the announcement of price hike as a gimmick to push customers to advance their decision to buy vehicles to this month.

Sales are expected to decline further this month, as December has traditionally been a lean month for vehicle sales. Customers tend to wait for New Year discounts and expect new models launches.

“The industry is not doing well, as expected, and it will be difficult to achieve any growth in the last quarter of the financial year over previous year due to high base. Last quarter of previous year was very good for the industry,” R C Bhargav, chairman, Maruti Suzuki said.

When asked about price hike announcement by auto companies in the current scenario, Bhargav said that costs have gone up and they have been forced to hike prices.

As per data released by Society of Indian Automobile Manufacturers (Siam), vehicles sales across categories registered an increase of 1.79 per cent at 1,515,600 units in November against 1,488,894 units in the same month a year ago.

In the domestic passenger car segment, sales fell by 8.25 per cent to 158,257 units last month compared with 172,493 units in the same month a year ago. In the two-wheeler segment, total sales in November rose by 1.23 per cent to 1,175,429 units from 1,161,176 in November 2011.

“The carryover from the festive season was not there. Market continues to be tough. December seems to be even worse as historically we never had higher sales in the month compared with October and November,” said Siam director general Vishnu Mathur.

In October, domestic passenger car sales grew by 23 per cent to 172,459 units compared with 140,105 units of cars sold in the same month in the previous year.

This is the steepest decline since August, when the sales dropped by 18.56 per cent, followed by 5.36 per cent decline in September.

“Next few months would continue to be difficult for the industry as the interest rates remain high and the economy is not doing well. There is no incentive for the buyer,” said Rakesh Batra, partner (auto), Ernst & Young.

In November, Maruti Suzuki’s sales increased by 2.35 per cent to 74,793 units while Tata Motors’ car sales were down by 42.49 per cent at 13,538 units.

Motorcycle sales last month went up marginally to 867,518 units from 867,088 units in the year-ago month. Hero MotoCorp posted 8.31 per cent fall in sales to 443,308 units in the month and Bajaj Auto’s sales went down marginally to 227,186 units. However, Honda Motorcycle & Scooter India (HMSI) posted 37.36 per cent increase in sales to 99,062 units and TVS Motor reported 14.29 per cent increase in sales.

Overall sales in the scooter segment grew by 6.64 per cent to 244,392 units from 229,173 units. HMSI’s scooter sales fell by 6.34 per cent to 110,376 units in November, while Hero MotoCorp’ scooter sales increased by 24.71 per cent to 44,197 units. TVS Motor's sales saw decline of 12.87 per cent to 35,837 units.

Total sales of commercial vehicles in November were down by 7.31 per cent to 61,410 units from 66,254 units in the year-ago period, Siam said.

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