Discounts fail to boost car sales in December

Maruti and Hyundai see marginal rise in demand for entry-level hatchbacks

Demand for passenger vehicles remained sluggish in the fag end of 2013, with six of India’s leading automobile manufacturers together posting a decline of 2.3 per cent in monthly sales at 153,618 vehicles in December.

While market leaders Maruti Suzuki India Ltd and Hyundai Motor India Ltd (HMIL) managed to register a moderate increase in volumes, factors such as higher fuel prices, expensive finance costs, tighter lending norms, among other reasons, impacted sales at Mahindra & Mahindra (M&M), Ford, General Motors and Toyota Kirloskar Motor during the month.

Maruti Suzuki sold 86,613 vehicles last month, an increase of 5.5 per cent compared to 82,073 sold in the same month the previous year. Sales were largely driven by demand for entry-level M800, Alto, A-Star and WagonR models (which grew 16.7 per cent to 38,286 vehicles) and entry-level DZire sedan (which grew 18 per cent to 15,427 vehicles). Weak demand for export models (which declined 67 per cent to 4,311 vehicles), however, dragged down the overall wholesale numbers for the company 4.4 per cent to 90,924 vehicles.

At Hyundai, too, demand for new entrant Grand boosted domestic sales numbers during the month. The South Korean auto giant reported sales growth of 6.2 per cent in December at 28,345 units. Rakesh Srivastava, senior vice-president (sales and marketing) at HMIL, said: “Hyundai improved efficiencies, launched new model Grand on new global platform, made strong initiatives in rural and exchange sales to increase its market share to highest level since inception and achieved its annual business plan.”

The tapering demand for diesel-powered models took its toll on M&M and Toyota Kirloskar, which have a strong portfolio of diesel products. Sales for utility vehicle maker M&M dropped by 28 per cent to 16,436 vehicles. “While the immediate turnaround in the auto sector is not expected without certain policy corrections and support, the worst seems to be over,” said Pravin Shah, chief executive officer (automotive division) at M&M.

At Toyota, sales declined by around 12 per cent to 10,648 vehicles. General Motors and Ford India followed suit with wholesale volumes in the domestic market, dropping 19.3 per cent (to 5,705 vehicles) and 9.9 per cent (to 5,871 vehicles), respectively.

P Balendran, vice-president (corporate affairs) at General Motors India, said: “Despite providing highest level of discounts during December, footfall in showrooms failed to pick up. The outlook for the industry remains grim in the short-term as the dampeners like slow economic growth, high inflation and fuel costs continue to pose challenges and the overall economic scenario continues to be uncertain. Unless the government offers a stimulus package to the struggling automobile industry, the market is unlikely to see any upturn before a new government assumes office after elections this year.”