Car sales fall 20 per cent in March

After a free fall in February, car sales in India for the month of March hit another record low, leading to the overall car sales moving into a negative territory for the entire fiscal, the first in a decade. Passenger car sales for March fell over 20% led by an across-the board sharp decline posted by leading carmakers that included Maruti Suzuki, Hyundai India, Tata Motors and Volkswagen, among others. 

The prevalent glum macroeconomic environment, uncertain fuel prices and rising interest rates have taken a toll, constraining customers to defer car purchases. 

The off take has remained low despite historic high discounts of over 10% to 15%. With no positive stimulus on the horizon, industry players expect the tough times to continue in the first half of current fiscal year too. Umesh Karne, auto analyst, BRICS Securities, said: "The year started on a decent note, the prolonged slowdown and no positive stimulus led to all segments of passenger vehicles, two-wheelers and truck posting lowest growth seen in the last four-five years."

The decline is steeper on account of large base of March last year, which saw the highest ever sales for the passenger vehicles due to festive season in some parts of the country and delayed budget leading to people advancing the purchase due to fear of price hike post-budget.

Difference in car sales between March 2012-13

Analysts forecast a single-digit growth of passenger vehicle market, with things likely to take off in the second half. "While the first half will face demand pressure, we are hoping for sales gathering speed in the second half. What we are seeing right now is deferment of purchase, once there is a positive news on the horizon, we expect growth rate to take off again," added Karne.

While India's largest carmaker Maruti Suzuki did not announce its sales numbers on Monday on account of holiday, the company, analysts believe, mirrors the overall negative trend in the passenger vehicle space. The second-largest carmaker Hyundai India posted a decline of 13.5% to 33,858 units as against 39,122 units sold by the company in the domestic market for the same period last year. The struggle continues for Tata Motors, as its sales in March dropped over 67% to 12,347 units. General Motors and Ford India too posted a double-digit decline of 14.94% and 41.61%, respectively. 

Rakesh Srivastava, VP, sales and marketing, Hyundai Motor India, said, "The slowdown of economy is impacting vehicle sales. Against the large base of last year, there was a sharp drop in conversion of enquiries in the absence of any positive stimulus and sentiments. We foresee the pressure on volumes to continue till there is significant improvement in macro-economic factors." 

The ones with utility vehicles in their portfolio continue to buck the trend and this is despite increase in excise duty for Utility Vehicles in the recent Budget. M&M posted a growth of 13% by selling 25,847 units in March. Led by the strong showing of Innova and the new Etios and Liva, Toyota Kirloskar grew 7% and Renault India posted over 7-fold growth to over 8,000 units in March, with its SUV Duster accounting for 70-80% of its sales. 

Pravin Shah, chief executive, automotive at M&M, said: "The 3% additional excise duty on SUVs is clearly a deterrent. By not having a level-playing field for all SUVs, it certainly destabilises the market dynamics. At Mahindra, we hope to create excitement in the market during FY13-14 especially with the launch of our sub-4 metre Verito and other product offerings." 

And the story is not too different for two-wheelers. The country's largest two-wheeler maker Hero MotoCorp posted a 11% decline in March selling 4,68,283 units, TVS Motor Company too registered a contraction of over 10% to 1,43,239 units. Honda Motorcycle and Scooters India and India Yamaha Motor recorded a sales growth of 14% and 20%, respectively, on the back on entering into new segments. 

Anil Dua, Senior VP (marketing & sales), Hero MotoCorp, said, "Indian auto industry continues to reel under the adversities of persistent inflation, firm interest rates, rising fuel prices and negative consumer sentiment. All these factors have adversely impacted the growth of the industry and our sales volumes." 

Lower plant utilisation and reduced shifts have become the regular feature and this hugely impacts industrial productivity which has been suffering for long and that has direct impact on the commercial vehicle sales.

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