With rising interest rates and high fuel prices slowing down auto sales in the domestic market, the passenger vehicle segment is likely to see a drop in sales in July, for the first time in nearly three years.
The country’s largest car maker, Maruti Suzuki India Ltd (MSIL), expects volumes to come down by 20,000 units due to discontinuation of production of premium hatchback Swift and entry-level sedan DZire. Production of the two models will resume next month.
Industry experts said this alone would bring down volumes by 10 per cent in an industry which saw sales of 189,000 passenger vehicles last month. The manufacturer accounts for 45 per cent share of sales in the domestic market.
“There are three factors that are affecting sales currently. Interest rates have gone up 11 times in the last one year. The severity of the fuel price rise and the high level of inflation have dampened consumer sentiment. Initial estimates indicate the passenger vehicle industry is likely to see drop in sales this month,” said Mayank Pareek, managing executive officer (marketing and sales), MSIL.
Industry sources said growth rate in passenger vehicle segment in the first four months this year is likely to come down to 6 per cent from 8.77 per cent posted between April and June.
According to the revised forecasts of the Society of Indian Automobile Manufacturers, passenger vehicle sales are likely to grow between 10 and 12 per cent as against the 16-18 per cent growth rate projected earlier in April.
While this segment grew by a moderate 4.15 per cent to 189,000 units in June, it saw slowest growth in 27 months last month at 1.62 per cent, mainly due to rise in lending rates and loss due to the 13-day strike at Maruti Suzuki’s Manesar unit.
