With the loans getting expensive, car sales were expected to show a negative growth. However, what no one expected was a decline in car sales in the month of August 2011. Between the months of April 2010 and March 2011, car sales registered a year-on-year growth of 30%. However, high inflation, ever-increasing fuel prices and expensive loans, meant that the sales of cars would be adversely affected. Moreover, due to the increased cost of living, big expenses like buying a car are put on hold by potential buyers. In July 2011, the Society of Indian Auto Manufacturers (SIAM) predicted lower sales, which it claimed would dip from 12-15 % to 11-13 % for the time period April 2011-March 2012.
In August 2011, Maruti Suzuki India Ltd., India's leading passenger car manufacturer, registered sales of 12.7 % on a year-on-year basis. The company saw a decline of 8% in its sales during April-August 2011. This is only partly because of the dispute at the Manesar plant of the company. This is not a one-off case as Hyundai Motors also saw a 7% fall in its domestic sales. It was a similar case with Tata Motors, whose car sales showed a decline of 3%. Overall sales of passenger vehicles in the domestic market fell by 34% as compared to the previous year. And during the months of April–August 2011, passenger vehicle sales came down by 21%.
Earlier in the week, Chairman of Maruti Suzuki India Ltd., R. C. Bhargava said, “We are all hoping that with the coming festival season, there will be a pick up in demand and things will become better. But overall for the year, I would be surprised if we can get to more than 8% or so of growth for the industry as a whole.”
SIAM expects, that unlike August 2011, automobile sales would rise starting mid-September before the advent of the festive season in India. In a press briefing, Vishnu Mathur, Director General, SIAM, said, “We do expect the markets to pick up somewhere around mid-September before the festive season begins”. Upon being asked about the sales figures for the month of August 2011, he said, “It is too early to give an accurate figure as data from some major companies have not come in yet. But there are tell-tale signs of a slowdown.”
According to SIAM, the growth rate of the industry during months of April-July 2011 was 13.55%. Moreover, the number of sales for the months of June-July was the lowest in the last two years. Vishnu Mathur also said, “The passenger car sector is certainly hit because of low conversion rates from enquiry rates to purchases due to high interest rates, but on the other hand, initial data from the two-wheeler segment has shown positive growth.”
In the coming week, SIAM will be declaring numbers for August and year-to-date. This data will be keenly followed, as it may provide clues to smoothen the road ahead. Industry Analysts are hoping that new launches over the next few months, which include the Honda small car Brio, Hyundai’s small car Eon and the diesel variants of Toyota Etios and Liva, would provide the much needed relief.
