With last month’s much-hyped festival season failing to offer any major boost to sagging

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car sales, the industry is staring at negative sales this financial year.

According to a top Maruti Suzuki official, passenger car sales may end up falling as low as four per cent this financial year from last year’s 1.98 million units owing to sluggish demand. Maruti Suzuki itself would lead the industry decline owing to labour issues that forced the carmaker to lose production of almost 65,000 cars.

Between April and September 2011, car sales fell by one per cent at 909,283 units, compared with 921,812 cars sold in the year-ago period, according to Siam (Society of Indian Automobile Manufacturers). This decline in sales has been attributed to rising interest rates as well as fuel prices. The October 2011 car sales are also set to fall due to the strike at Maruti Suzuki’s Manesar plant.

Maruti Suzuki lost more than half of its monthly output due to labour unrest and later mishandling of human resource issues by the company management in October 2011.

The country’s largest carmaker sold 55,595 cars in October 2011 against 118,908 sold in the year-ago period, registering a fall of 53 per cent. “The company lost production of over 40,000 units (Gurgaon and Manesar) due to labour unrest in the month,” Maruti Suzuki claimed.

Hyundai Motor India that was expected to post higher sales on account of its new Eon model saw domestic sales falling five per cent at 33,001 units against 34,720 cars sold in October 2010.

“We have seen that sales get a boost in the festival season but this year the sentiment has been tepid. We don’t expect a major upswing in the near future. The challenging economic environment is affecting industry,” said Arvind Saxena, director (marketing and sales) Hyundai Motor India.

Tata Motors was the only carmaker among the top three that showed higher sales in October 2011 compared to the year-ago period, buoyed by Nano and Indica. The company sold 25,124 cars last month, a growth of 3 per cent over 24,478 units sold in October 2010.

General Motors showed a marginal growth last month selling 10,062 cars owing to Beat that recorded sales of 5,362 units.

“We are planning to ramp up production of our Beat Diesel model to meet its growing demand in the coming months. The market, however, continues to remain sluggish due to unprecedented hike in interest rates, fuel prices, commodity prices, growing inflation and negative market sentiments,” said P. Balendran, vice-president, General Motors India.

Mahindra & Mahindra’s sales jumped 20 per cent at 41,506 units on the back of its new sports utility vehicle model XUV500.

“The XUV500 has received a phenomenal response with 8,000 plus bookings in just 10 days and we are currently in the process of expediting deliveries before re-opening bookings,” said Rajesh Jejurikar, chief executive (automotive division), Mahindra & Mahindra.

With inventories piling up at showrooms, car sales may even look lower in November and December than in October, the Maruti officials said. Dealers usually try to exhaust yearly stock by December each year, in anticipation of fresh stock.

“Sales dipped by around three per cent during the first seven months following three strikes at Maruti Suzuki’s plants. But, we expect a revival in the next few months with higher sales of newly launched small car models during the festive month and resolution of Maruti’s production woes,” said Sridhar Chandrasekhar, head, CRISIL Research.