Passenger vehicle sales skid on high fuel prices, financing costs

Eight of the country's leading car makers register a combined sales decline of 16.7% in March

High financing costs and fuel expenses continued to affect the domestic automobile industry, with eight of the country's leading car makers posting a combined sales decline of 16.7 per cent in March.

This was a fourth straight month that saw a decline in sales of passenger vehicle sales. This trend, however, is indicative and does not include the sales numbers of Maruti Suzuki, the country's largest passenger car maker, which will release its figures tomorrow.

Maruti's sales rose 5.56 per cent to 943,156 units between April and February 2012-13. However, given the current macroeconomic conditions, passenger vehicle sales are expected to show weak growth for the full financial year. The eight car makers that gave their numbers today sold 124,057 units in March, 16.7 per cent less than the previous month. For the full financial year, their sales rose marginally to 1.46 million units. (IN SLOW LANE)

While Hyundai Motor India Ltd (HMIL) posted a drop of 13.5 per cent to 33,858 units in the domestic market, the fall was even sharper for Tata Motors, which saw a decline of two-thirds to a mere 12,347 units in March, compared with 36,984 vehicles in the month a year ago. The company sold a combined 8,903 units of small cars Nano, Indica and Indigo - much less than the initial expected volumes of 20,000 units a month of the Nano alone.

Rakesh Srivastava, vice-president (sales and marketing), HMIL, said: "The economic slowdown is impacting vehicle sales. Against a large base of last year, there was a sharp drop in conversion of enquiries in the absence of positive sentiments. We foresee the pressure on volumes to continue till there is a significant improvement in macroeconomic factors."

Utility vehicle major Mahindra and Mahindra (M&M), Toyota Kirloskar Motor (TKM) and Renault India managed to buck the industry trend. While M&M's sales increased 12.6 per cent to 25,847 units on the back of diesel-powered utility vehicles, Renault rode high on the success of sports utility vehicle (SUV) Duster. Renault sold 8,232 units last month, with 77 per cent of the volumes coming in from the Duster.

M&M, however, has expressed concern over the imposition of higher levies on SUVs in the Budget. Pravin Shah, chief executive (automotive division), M&M, said: "The three per cent additional excise duty on SUVs is clearly a deterrent."

TKM increased its sales on the back of its new models - the Etios and Liva. It sold 19,452 units in March, seven per cent higher than the 18,220 in the year-ago period.

"The increase in excise duty of SUVs and implementation of increased road tax in some states have helped clear the stock of pre-Budget vehicles. The market continues to be slow, and is expected to remain sluggish in the coming months," said Sandeep Singh, deputy MD and chief operating officer (marketing and commercial), TKM.