Car sales ran out of gas in 2013 as a slowing economy and poor sentiment, dampened by high interest rates and pinching inflation, saw buyers stay away from showrooms despite heavy discounts and attractive freebies.
Full-year numbers released by some of the top car companies threw a bleeding report card, a far cry from the healthy projections painted just about a year and a half back. The going is expected to remain tough even in the new year as companies cut production and halt new investments with no end in sight to the slowdown.
Maruti, the country’s top car maker, eked out a 0.03% growth on total sales of 10.63 lakh units. The company’s volumes seemed to have done a tad better in 2013, thanks to the loss of production it suffered in 2012 due to a crippling labour problem. This made it a low base year for Maruti.
But while Maruti managed to just-about stay positive, the going was not that easy for others. Hyundai, the second-biggest car maker, saw volumes slip 3% in the year as it sold 3.80 lakh units against 3.91 lakh units in 2012.
Maruti has already said that it may go slow on investments for a new plant in Gujarat, its first outside Haryana. The company has been trying to tap deeper into rural and semi-rural markets as the urban areas remain weak, hit the hardest by interest rates and economic slump.
The year also saw Mahindra & Mahindra — which had been going well in 2012 — slip into the red as its volumes declined by 9% to 2.42 lakh units. Competitive pressures and increased duty on utility vehicles and SUVs have impacted the company’s business.
Siam, the industry lobby group, has already raised fears that car sales are headed for a fall in financial year 2013-14, which would make it the second year in running of declines. Siam has been seeking a revival package from the government in the form of lower excise duty and incentives for scrappage of older vehicles.
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