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Rough road ahead for autos, rural sales likely to be hit

business Updated: Apr 23, 2015 09:39 IST
HT Correspondent
HT Correspondent
Hindustan Times
Deficient monsoon

Deficient monsoon this year could have a major impact on the domestic automobile industry, which is eyeing a double-digit growth after three successive years of slump.

A major chunk of motorcycle sales comes from rural and semi-urban areas in India, where a truant monsoon spells doom.

Last year, when monsoon failed to deliver, motorcycle sales, which comprise bulk of the automobile sales in the country, and small car segments, had struggled.

“It is a matter of great concern for us. Monsoons have a significant impact on the industry and we were hopeful of a normal year in 2015,” said Sugato Sen, deputy director-general, Society of Indian Automobile Manufacturers (SIAM). “Share of rural areas in motorcycle and small car sales is significant and if farm incomes do not grow then sales will not pick up.”

Already, unseasonal rains in parts of northern India in the last two months have caused widespread damage to crops, impacting farmers and sale of motorcycles which have not grown since January 2015. Sale of farm equipment and tractors also suffered a torrid year with a steep decline in sales. Mahindra Tractors, the market leader in India, reported a 14% decline in sales in 2014-15.

“Unseasonal rains and hailstorms have adversely affected market sentiment. We have adjusted dealer inventory in the fourth quarter of 2014-15 to align with market conditions,” said Rajesh Jejurikar, president and chief executive, farm equipment and two-wheeler division, Mahindra & Mahindra Ltd.