Car sales continue to tread the parched road

Nine firms sell 7% fewer vehicles in April as financing and fuel costs keep buyers away

Demand for passenger vehicles continued to be weak in the domestic market at the start of the financial year, as sluggish economic activity, high financing costs and fuel expenses kept customers away from showrooms.

In April, nine of the country’s leading passenger vehicle makers together posted a sales decline of seven per cent to sell 191,252 units, compared with 205,811 in the same month last year.

Maruti Suzuki India Ltd (MSIL), the country’s largest car maker, which last week reported its highest ever quarterly profit, registered a nominal rates increase of 0.3 per cent to 90,523 in the month. Though the company had been struggling to retain volumes in its bread-and-butter small-car category for most of last financial year, it managed to sell 34,927 units of the M800, Alto, WagonR and A-Star — an increase of 13.7 per cent compared to the year-ago period.

MSIL, however, saw a decline in demand for both its premium hatchback (Swift, Ritz, Estilo) and utility vehicle (Ertiga) categories. These segments had previously seen record offtake, despite a slowdown in the industry. While the company’s sales in the premium hatchback segment dropped a sharp 17.4 per cent to 21,535 units, those in the UV space slid 4.9 per cent to 5,318 units.

The sales of Hyundai Motor India Limited (HMIL) declined 7.6 per cent to 32,403 units. The drop was even sharper for Tata Motors, the volumes of which nearly halved last month. Tata Motors sold 11,570 passenger vehicles, a decrease of 48.9 per cent from the 22,658 units sold in the year-ago period.

Utility vehicle major Mahindra & Mahindra (M&M), which took a hit due to an excise duty increase on SUVs in the Budget this year, recorded a marginal sales growth of 0.9 per cent in April. It sold 20,748 units.

Rakesh Srivastava, senior vice-president (sales & marketing), HMIL, conceded “the domestic market continues to witness pressure” but added there had been some sign of recovery with the recent correction in fuel prices and the demand for petrol cars had increased.

The overall sentiment in the industry, however, remains muted. “Despite announcing attractive sales offers, showroom footfalls, enquiry levels and conversion rates remained very poor. We do not expect the market to improve in the short term, as the economic slowdown, political uncertainty and various other factors continue to weigh,” said General Motors (GM) India Vice-President P Balendran.

In fact, Toyota Kirloskar Motor, the volumes of which plunged 37 per cent to 9,007 units in April, has initiated measures to reduce inventory — at both the company’s and dealers’ ends.

Sandeep Singh, Toyota’s deputy managing director and chief operating officer (marketing & commercial), said: “The market continues to be sluggish and is expected to take some time to recover.”

Bucking the industry trend, on the other hand, were Honda Cars India (HCI), Renault and GM. These firms managed to swing in a positive sales momentum on the back of new products. While Honda’s sales grew a strong 20 per cent to 8,488 units, Renault’s volumes went up 10-fold on a low base and due to a robust demand for the Duster, its compact sports utility vehicle. For GM, demand for its Sail helped it post a marginal increase of 2.4 per cent in monthly volumes. While the Duster contributed as much as 85 per cent to Renault India’s overall volumes, the Honda Amaze and Chevrolet Sail added 57 per cent and 42 per cent, respectively, to the total sales of HCI and GM in April.