Car launches fail to boost sales in November

This Diwali failed to bring cheers for Indian carmakers as domestic car sales fell 8.25% year-on-year in November despite a spate of launches in the festive season and steep discounts on offer. 

This is the first time in more than a decade that the passenger car market, which excludes utility vehicles, has declined in the festive season for two consecutive years, industry experts say. They blame it on high interest rates, rising fuel prices and the overall slowdown. 

"Despite the spate of new launches, we saw 3% drop this festive season (September to November) and this is over a 14% drop last year," Mahantesh Sabarad, auto analyst at Fortune Broking, said. 

A number of cars including Maruti Suzuki's Alto 800, Chevrolet SAIL U-VA and refreshes and variants from Ford, Volkswagen and Toyota had hit the road just ahead of the Diwali season, and carmakers were offering 5-10% discounts on most models. 

Sabarad feels the industry will require many positive factors to rebound. "For the market to revive, host of factors need to come together right from fall in interest rates, pick up in investment climate and some favourable moves from government to improve overall sentiment," he said. The overall passenger vehicle, which includes utility vehicles, however, grew 3.86% in November, thanks to the continuing craze for utility vehicles. 

For the April-November period, the cumulative passenger vehicle sales grew 9.62% to 17.52 lakh units, led 61% growth in the utility vehicles space, which registered sales of 3.57 lakh units. Passenger car sales grew just 1% to 12.40 lakh units during the period. Rakesh Srivastava, head sales & marketing at Hyundai India, said high fuel prices and interest rates have impacted the passenger car industry. "This year has been very challenging in terms of customer acquisition largely because of the prevailing macro-economic condition," he said. He, however, added that aggressive marketing campaign communicating the price value proposition helped Hyundai outpace the overall passenger car market with good demand for diesel cars like i20, Verna and Elantra and resurgence of petrol models such as Eon, i10 and Santro. He said drop in interest rates and recalibration of fuel prices could act as a big catalyst for growth for passenger car industry. 

Manohar Bhat, marketing V-P at Maruti Suzuki, said the absence of diesel vehicles at the entry level continues to pull down the market. 

Two-Wheelers Gain 

While the passenger car sales dropped, record numbers for Hero, Honda and others helped the two-wheeler market into a flattish 1.23% growth in November. K Srinivas, president, two wheelers, at Bajaj Auto, however, said that for the overall festive season of September-November, the industry sales dropped 5%. He said Bajaj Auto managed to grow 5% during this period. The slowing industrial activity continues to take a toll on the commercial vehicle segment, which declined 7.31% year-on-year in November, led by over 33% decline in medium and heavy-duty trucks. 

The overall vehicle sales for November remained in positive territory with 1.515 million units sold for November 2012. 

Also read: Year-end discounts and offers on cars