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Uncertain economic conditions continued to take its toll on automobile manufacturers with sales of passenger cars in the domestic market dropping by 10.15% in April.
The biggest monthly decline in about a year has come despite the government slashing excise duties on passenger as well as commercial vehicles in the interim budget earlier this year.
According to data released by industry body the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales in April stood at 135,433 units in April as compared to 150,737 units in the corresponding period last year.
Sugato Sen, director general, SIAM, said, "This is the biggest decline since May 2013, when car sales dropped by 11.7%. What is happening is that we are unable to recover from the negative sentiment. We need a trigger to change the sentiment."
In the interim Budget presented earlier this year, Finance Minister P Chidambaram slashed excise duty to 8% from 12% for small cars, scooters, motorcycles and commercial vehicles; to 24% from 30% for SUVs; to 20% from 24% for mid-sized cars and to 24% from 27% for large cars.
Sen explained the reduction in excise duties has not translated into a pick-up in sales as even after the duty cut the cost of ownership is very high: "Today, even after the cut, the cost of ownership is extremely high. The small car customers are the most vulnerable under the current circumstances." Footfalls in showrooms have increased but have not converted into sales.
Sen informed revival of sales can only happen after a new government comes to power and announces measures to propel economic growth. "The current rate of 4-5% growth is not enough. For healthy growth of the automotive sector, we need the economy to grow at over 7%."
While factors like high interest rates, fuel prices and inflation are still affecting demand, concerns have also surfaced over forecasts of a deficient monsoon.
SIAM said the roll out of Goods and Services Tax (GST), implementation of a fleet modernisation programme and greater emphasis on higher economic growth must feature on the agenda of the new government a priority basis.
While the country's largest carmaker Maruti Suzuki India registered over 12% decline in its domestic sales at 79,119 units in April, Tata motors’ sales slipped by 42% to 10,055 units.
Korean auto major Hyundai Motor India and Honda Cars were among the few to buck industry trend and post an increase of 8.8% (at 35,248 units) and 30% respectively (at 11,040 units).
In the two-wheeler segment, total sales in April grew by 11.67% to 1,304,447 units as against 1,168,100 units in the same month last year.
Sales of motorcycles last month grew by 8.06% to 911,908 units from 843,909 units in the year-ago period. The scooters segment continued to record strong demand with sales increasing by 26.08% at 329,680 units.
According to SIAM, sales of commercial vehicles (CVs) were down by 24% to 43,080 units in April. Sen said with the ban on mining being lifted, there could be some improvement in the CV segment in the coming months.
Three-wheeler sales during the month declined by 2.17% to 33,602 units as against 34,348 units in the same month last year. Overall sales of vehicles across categories registered an increase of 6.96% to 1,569,670 units from 1,467,472 units in April 2013.
