Car sales growth moderates to 13% in April

Car industry clocked 13% growth in the first month of FY12 against 30% in FY11, showing moderation in demand. And, the demand is weakening as RBI kept on hardening the interest rates to rein in inflation, which has led to fatter EMIs. Sentiments have been further impacted by rising car prices due to higher cost of inputs and increasing running cost due to dearer fuel. Around 70% of car sales are done through financing. Footfalls and enquiries at dealerships have been coming down, senior officials from top companies like Maruti, Hyundai and Toyota said. The Japanese catastrophe is compounding the problem as disruption in supply chain has forced companies like Toyota and Honda to slash production in India. New hatchback launches from the two companies—Toyota’s Liva and Honda’s Brio, could also be impacted, though they are still assessing the situation. While many analysts believe that demand may even slip to single digit if the situation persists, some are still optimistic. According to numbers released by the Society of Indian Automobile Manufacturers (SIAM), car sales in April stood at 1.62 lakh units against 1.43 lakh units in the same month last year. The weakness was apparent as industry leader Maruti’s small car portfolio (comprising car like Alto, Wagon-R, Swift and Ritz) grew by 2%, leading to an overall 9% growth in the month. Honda and Ford fell in the negative territory. Two-wheeler sales were, however, healthy as numbers grew 26%. Sales of motorcycles were up 23% as Hero Honda continued its strong showing, while scooter numbers were up 48% at 1.75 lakh units.