Home / Industry / Manufacturing /  Car makers end 2013 on weak note as December sales skid

New Delhi: Car sales in December continued to sputter as consumers postponed purchases because of sluggish economy and rising prices.

A broad-based revival, analysts say, may happen in the second half of 2014 after political uncertainty ends with the election of a new government in general elections that are due by May.

Maruti Suzuki India Ltd, the country’s largest car maker, saw its local sales rise 5.5% to 86,613 units, as the company offered cash discounts of 10-12%—the highest since it was established in 1981. The increase in sales were led by a 16.7% growth in mini passenger cars, which include WagonR, A-Star, Alto and M800.

Companies offer discounts at the end of the year to lure buyers, who tend to postpone purchases to the next year.

Maruti Suzuki’s sales were also helped by its strong performance in rural areas.

“Had it not been for the rural market, the firm would have had tougher time," R.C. Bhargava, chairman of Maruti Suzuki, told reporters on 24 December, adding demand in the cities had slowed by 5-6%.

An increase in sales of petrol models, as the price difference between petrol and diesel narrowed, also helped the firm.

The share of petrol models in Maruti’s overall portfolio increased to 68% in the fist half of fiscal 2014 from 65% a year earlier, according to Yaresh Kothari, an analyst at Angel Broking Ltd. This boosted sales of small cars by 8% in the first nine months of the current fiscal year, he said.

Hyundai Motor India Ltd, the country’s second-largest car maker, said domestic sales in December rose 6%. The local unit of the South Korean car maker sold 28,345 units in December compared with 26,697 units a year ago—that’s 6.24% rise in domestic sales.

“Year 2013 was very challenging and rewarding. Hyundai achieved its annual business plan and highest market share since inception. Manufacturing operated at 99% capacity utilization and had the fastest five million rollout in India," said Rakesh Srivastava, senior vice-president, sales and marketing, at Hyundai Motor India.

Mahindra and Mahindra Ltd, the maker of the Bolero and Scorpio sports utility vehicles, said December sales fell 28% from a year ago to 16,436 units.

Mahindra and Mahindra’s total domestic sales, including light vehicles and trucks, also fell to 36,881 units in December from 42,307 a year earlier.

“During first nine months of the current fiscal, the auto industry has seen a negative growth due to sustained deceleration in economic activity and consequent weakness in consumer and business sentiments," said Pravin Shah, chief executive of the automotive division at Mahindra and Mahindra.

“Utility vehicle sales of the company remain impacted by a sluggish demand environment and increased competition," said Kothari of Angel Broking.

The average consumer-price inflation for 2013 was at 10.09%, compared with 9.69% in 2012, affecting disposable incomes that led to customers delaying purchases.

The local arm of Toyota Motor Corp. also saw its December sales decline 12% from a year earlier to 10,648 units. “The market sentiments do not seem to be improving. In the last few months, we have made our best efforts to control inventory both at our end and at our dealers’ end," said Sandeep Singh, deputy managing director and chief operating officer, marketing and commercial, Toyota Kirloskar Motor Pvt. Ltd.

Ford India Pvt. Ltd also reported lower local sales in December. The Indian arm of the US car maker, which saw sales of its EcoSport sports utility vehicle surge, said domestic sales fell 10% to 5,871 units.

It was an equally bad month for General Motors India Pvt. Ltd. Domestic sales at the firm fell 19.3% to 5,705 units.

The introduction of new models at the Auto Expo next month, coupled with the harvest season, may boost sales to some extent, Kothari said.

The Bombay Stock Exchange (BSE) auto index rose 0.13% to 12,274.57 points on Wednesday, while the benchmark Sensex dropped 0.14% to close at 21,140.48 points.

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