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Car sales contract for third month in a row

Demand for scooters, utility vehicles too fell sharply as buyers pushed back purchases
Amrit Raj Mail MeTwitter
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First Published: Mon, Feb 11 2013. 01 16 PM IST
In December, total passenger vehicle sales, which include cars, utility vehicles and vans, also declined 4.62%. Photo: Pradeep Gaur/Mint
In December, total passenger vehicle sales, which include cars, utility vehicles and vans, also declined 4.62%. Photo: Pradeep Gaur/Mint
Updated: Tue, Feb 12 2013. 12 50 AM IST
New Delhi: Car sales contracted for the third straight month in January as buyers pushed back purchases in a depressed economy. Demand for scooters and utility vehicles has also declined sharply after contradicting the slump in the industry for months.
Cars sales fell 12.45% from a year ago to 173,000 in January as weak consumer sentiment kept buyers from showrooms. Sales had declined 12.51% in December and 8.25% in November.
Annual sales growth for utility vehicles slowed to 40.68% in January from 87.74% a year earlier, according to data provided by industry lobby Society of Indian Automobile Manufacturers. For scooters, sales growth fell sharply to 6.4% in December from 32.39% a year earlier before recovering to a 12.24% pace in January, Siam data show.
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Utility vehicles and scooters represent two spectrums of the industry and the downward momentum in their sales indicates more gloom.
“As of now, the signs of moderation is quite visible in UV segment but we don’t know what will happen in the case of scooters as two-wheeler sales have been very volatile throughout the year,” said Vishnu Mathur, director general, Siam.
Sales of utility vehicles grew strongly in previous months, reflecting the rising aspirations of Indian buyers and a market shift toward diesel-run vehicles. For scooters, the demand came primarily from women amid vigorous marketing campaigns by two-wheeler makers.
“Decline is scooter segment is also because pent-up demand for (Honda Motorcycles and Scooter India Pvt. Ltd’s) Activa has got over,” said Pradeep Saxena, executive director at TNS Automotive, a research firm.
Siam, which in January lowered its forecast of passenger car sales for this fiscal year to 0-1% from its earlier prediction of 10-12%, said sales may shrink further given the current market conditions.
“Consumer sentiment has gone down significantly. A lot more needs to be done to bring down interest rates,” said Siam’s Mathur. “So, looking at the current situation, we will not be able to meet even this estimate” for car sales.
The Central Statistical Organisation estimates India’s economy will grow at 5% this fiscal year, the slowest in a decade, while finance minister P. Chidambaram sees gross domestic product growth at 5.5% in the year to 31 March and at 6-7% in the next fiscal year.
The Reserve Bank of India late January cut its key lending rate by a quarter percentage point, setting the stage for economic growth to revive.
Consumers have been postponing car purchases due to higher fuel costs and steep interest rates. Sales of passenger cars so far this fiscal year are down around 2% compared with the same period a year earlier.
Investments in the auto sector will also be impacted if the economic slowdown continues, Mathur said. “So far we have seen investments getting rescheduled, but we may soon see a slowdown in investments if the economic conditions do not improve,” he said.
In January, total sales of cars, utility vehicles and vans declined 4.62%. Sales of trucks and buses, a key indicator of economic growth, fell 9.51%. Two-wheeler sales grew at 8.46% to 1.2 million units. The overall auto industry grew at 5.31% to 1.56 million units.
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First Published: Mon, Feb 11 2013. 01 16 PM IST
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