August Car sales skid

High interest rates and steep petrol prices have marred the growth story of the car industry. In August, the sales growth lost the steam for the second consecutive month, with top three carmakers — Maruti Suzuki, Hyundai and Tata — witnessing decline in volumes. Maruti Suzuki’s sales were down 17% despite the launch of new Swift and the company has already said that it expects sales growth to be in the “small single digit” percentage point this fiscal. Hyundai too had a second straight month of decline in the domestic market as its volumes slipped 7% to 26,677 units against 28,601 units in the same month last year. Tata Motors witnessed the steepest fall, with numbers crashing by 33%. The company sold 16,829 units in the month against 25,212 units in the same month last year. Alarmingly, the Nano could not do much in terms of volumes as the model could manage sales of only 1,202 units, 85% lower compared to August last year. The month was equally tough for Ford Motors that saw another month of decline in domestic sales. Ford's volumes were down 7% at 7,382 units against 7,925 units in August last year. This happened despite the addition of the Fiesta sedan to its portfolio. Analysts said that the car industry continues to face a challenging environment at this moment with high interest rates and fuel prices acting as big dampeners. Also, the choppy markets and high inflation are acting as negative factors. Companies are banking on new models and the forthcoming festive season, where demand usually peaks, for realizing growth. Companies are offering heavy discounts to push sales. Honda’s sales grew 25% to 6,907 units, after it reduced the price of City sedan by Rs 66,000 and Jazz hatchback by Rs 1.6 lakh. The City model sold 5,819 units in August, showing a 35% growth. But while the big ones suffered, others like Toyota, Volkswagen and Mahindra managed healthy growth. Toyota, that has added the Etios sedan and the Liva hatchback to its portfolio, said sales in the month were up 84% at 11,693 units against 6,361 units in August last year. For Mahindra, the growth was 13.5% at 15,664 units, while Volkswagen’s sales rose 95% to 6901 units.