Liquidity concerns, lending norms mar growth.
Sales of India's third-largest passenger vehicle maker Tata Motors dipped by 6 per cent, while that of Mahindra & Mahindra (M&M), the country’s leading utility vehicle manufacturer, slid by 17 per cent in October as liquidity concerns and stringent lending norms marred growth in the festive season.
The drop comes at a time when executives from both the companies have forecasted that demand for vehicles is unlikely to improve even in the coming months. Companies such as Maruti Suzuki, among four-wheelers, and Bajaj, TVS and Hero Honda, among two-wheelers, have recorded similar declines in sales in the same month.
Tata Motors has reported sales of 17,014 units as against 18,021 units in the same month last year. Despite the fall, company officials claim that the overall number of passenger cars sold during the month is better than any other month so far this year.
Rajeev Dubey, president (passenger car business unit), Tata Motors, said, "The month of October was the best month so far for us in terms of sales. The growth has come on the back of tight liquidity situation and steeper interest rates."
The Indica range showed a decline of 19 per cent with sales of 9,484 units, despite the company launching the new Indica Vista two months ago. The company, meanwhile, has clarified that production of the old Indica has been halted.
The Indigo range, with sales of 4,616 units, recorded a growth of 96 per cent over October 2007. "The utility and sports utility vehicle range has been under pressure in the market since the July ad hoc imposition of an additional element of excise duty on vehicles having engine displacement of over 1.5 litre," said a company release.
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Similarly, sales of M&M have declined in the month as Scorpio, Bolero and pickups suffered. The company sold 13,935 units during last month as against 16,711 units in October 2007. Sales of Logan, made by Mahindra Renault, a joint venture between the two, dropped by 52 per cent during the month at 1,067 units as fierce competition from players like Tata Motors and Maruti Suzuki dented sales. The company managed to sell 2,214 units during the same period last year.