Sales Figures expected to improve in August after a drop in July

Monday 22 August 2011, 11:20 AM by Cartrade Editorial Team

The month of July has registered one of the steepest falls in the sales of the automobile manufacturing companies all over India. The reason for the sluggish car market in India is the rising interest rates on loans and higher fuel costs. An official of the local association of auto makers said “we are expecting sales to rebound from August because of the introduction of new cars and resumption of full production at Maruti Suzuki India Ltd.”

The company registered a drop in sales to 133,747 units in July 2011 as compared to 158,767 units sold in the same month last year, accounting drop of 16%. Before this, the sales went down to such figures in November 2008, when the sales dropped to as low as 19%. This is the first time the sales dropped for the company since January 2009. Being Asia’s 3rd largest automobile company, numerous companies have been affected by the drop in sales. Some of them are Maruti Suzuki, Hyundai Motor India Ltd. and Tata Motors Ltd.

Sales Figures expected to improve in August after a drop in July | CarTrade.com
Pricing of diesel and car makers

There is a constant increase in the interest rate, which has been raised by the central bank hat has led to the deferring of the purchases of the new vehicles by the Indian car buyers. Moreover, higher fuel prices have led customers to defer purchases of new vehicles in Asia's third biggest automobile market.

In order to control inflation, the Reserve Bank of India has increased its lending rate to 8% from 7.50%, since it began tightening policy rates in March 2010. Sandeep Pandya and Ankit Mehrotra, Mumbai-based analysts at Goldman Sachs Group, in a recent note said that "we believe the key drivers of Indian auto-demand cycle continue to show signs of worsening amid persistent 10-year-high inflation and rising rates".

Vishnu Mathur, Director General at the Society of Indian Automobile Manufacturers, said the fall in July sales was due to a combination of higher interest rates, a sharp increase in fuel prices as well as a loss in production at Maruti Suzuki. On 1st August 2011, Maruti Suzuki released a statement in its press release that it produced 17,000 lesser units of its highly reputed Swift hatchback and the Swift sedan. However, with the hope to bounce back, the company launched Swift 2011 this month.

According to the monthly sales figures revealed by Maruti Suzuki India Limited, 52,483 car units were sold in the domestic market, which indicate a 31% fall as compared to the previous year. The sales at Hyundai Motor Co.'s local unit fell by 11.5%, while those of Tata Motors dropped by 43%. However, there was a significant rise in the heavy vehicle sales, which rose to 64,241 vehicles in the month of July, marking a rise of 24%. Sales of light trucks fell by 36% to 37,111 vehicles. In regards to the fall in the sales for light trucks, Mathur said, "Light trucks are preferred by fleet operators mainly in cities where bigger trucks are not permitted. With the increase in movement of goods, demand for these is expected to remain strong".

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