If what bothered the automobile industry so far was a slowing growth rate, now it is staring at actual drops in sales.
Adding to the worries about an impending slowdown in the economy, car sales have started showing signs of tapering off. In June, the country’s top carmaker Maruti Suzuki’s total sales including exports dropped 9% to 80,298 from the same period last year.Tata Motors sales dropped 21% to 21,993. A credit squeeze triggered by a 1-percentage point rise in the repo rate in the space of three months and a Rs 5 increase in the price of petrol and Rs 3 in diesel have affected buyers’ sentiments. Other factors such as production loss due to industrial unrest in some places and dealers cutting down on procurement have only added to the industry’s worries.
Maruti Suzuki, which holds about 50% of the Indian car market, said its Manesar plant was shut for 10.5 days to a strike. Also, the company closed its Gurgaon plant for six days for maintenance. Its sedans SX4 and Swift Dzire showed a 60% drop in sales.
For Tatas, sales went down across segments. Nano sales dropped 29% at 5,451, while the Indigo sales dropped by 35%.
On the bright side, others including Hyundai, Mahindra, Volkswagen and Ford showed increase in sales. Hyundai’s total sales grew by 13% as both domestic and export sales improved. “The market continued to be slow but Hyundai sales grew partially due to success of the new Verna,” said Arvind Saxena, director, marketing and sales, Hyundai Motors India.
For Mahindra, utility vehicles and the sedan Verito (the erstwhile Logan) together clocked 21% growth. Rajesh Jejurikar, chief executive, automotive division, Mahindra & Mahindra said, “We are happy with the growth, given the pressures of increasing interest rates and commodity prices’’.
Japanese majors Toyota and Honda whose production was hit by the tsunami in March have shown signs of recovery as sales showed good growth.
“Interest rate hike, oil price shock and commodity price that pushed up production cost, all happened together,” said Abdul Majeed, leader auto practice, PricewaterhouseCoopers India. “The first and second quarters may be a little subdued for car companies.”