Car sales dip as buyers expect cut in duty

Car makers are witnessing sluggish sales in the current month as prospective customers have postponed purchases in anticipation of an excise cut in the forthcoming Union Budget.

Sales in the C and D segments or in the luxury category have been impacted the most as a five per cent drop in prices could result in savings in excess of Rs 30,000.

"There has been a definite drop in sales. But the degree of sales decline varies with cities, and car models. In Mumbai where the sales of C and D segment cars are higher, the drop is close to 50 per cent. In places such as Bangalore or Pune sales are down by 15-20 per cent," said BVR Subbu, president, Hyundai Motors India.

According to P Balendran, vice-president (corporate affairs), General Motors India, the decline in the months preceding the budget has become a recurring phenomenon since 2002 with sales falling by 15-20 per cent.

However, a Tata Motors spokesperson and several Maruti Udyog dealers said that was no decline in sales this month.

The expectations of a price cut comes on the back of the government's announcement that peak rate of customs duty will be brought down to the levels prevailing in the Asean countries and that there would be a corresponding cut in excise rates.

The excise on cars has been reduced from 40 per cent to 32 per, and now to 24 per cent. Although the Society of Indian Automobile Manufacturers has asked for a reduction of excise to 16 per cent, the industry expects a more realistic drop of 4 per cent.

Signs of a slowdown in sales were visible even in January as growth in the passenger car segment receded to 8 per cent against 20 per cent during the same month last year.