Car sales slide

Domestic car sales growth slipped into the red as expensive financing rates and rising petrol prices dented consumer sentiment and kept buyers away from showrooms despite a flurry of discounts. The dip comes two-and-a-half years after the 3% fall in January 2009 during the global economic recession. Interest rates have been moving up following the hawkish stand of the RBI to tame inflation. The central bank has raised its key rates 11 times since March 2010, pushing up EMIs substantially. The spike in petrol and diesel prices also acted as a dampener as monthly petrol bills have gone up and dented sentiments for new purchases. Maruti’s sales in July fell 26%, though this was more of a planned exercise. Maruti is in the process of launching the upgraded version of the Swift hatchback and thus stopped producing the previous-generation car in late June. The new car will be launched later this month. Also, supply of its Dzire sedan was impacted as its production was shifted from the Manesar to Gurgaon plant. Hyundai too was in the red despite a good response to its new Verna sedan. The company’s sales fell 11% in July to 25,642 units, mainly on account of the overall economic slowdown. For Tata Motors, the fall was the sharpest among the top three. The company’s numbers fell 38% as most of its models like Indica, Indigo and the Nano slipped. The Nano numbers were down 64% at 3,260 units. Ford saw numbers fall 14% in the domestic market to 7,504 units against 8,739 units in July last year. The US major hopes that the new Fiesta sedan (launched in July) could lift volumes. The companies said sales are likely to see a revival only around the festival season. But just as the major players suffered, some of the other companies had a good month. These included Toyota and Volkswagen. While Toyota had a near 100% growth on the back of new models like Etios sedan and Liva hatchback, Volkswagen was aided by the Vento sedan’s numbers. Mahindra’s growth in the month was 35% while GM rode the new diesel version of the Beat compact to register a 34% rise in sales in July. Honda Car’s sales grew 1%, following a Rs 66,000 cut on the City sedan. The two-wheeler sales, however, remained healthy. While sales of Hero Moto Corp moved up by 15%, TVS witnessed 12% growth.