Auto News

Rising petrol prices take toll on car sales

By Motortrend India Staff   |   01 June,2011

Automakers posted their worst growth in recent times in May as rising fuel prices and interest rates slowed down demand despite offering discounts to lure customers back to showrooms.

“Indian car market is heading for tougher times. It’s the return of high fuel prices and interest rates regime that are playing spoilsport for us and will continue to challenge us for the next few months,” Maruti managing executive officer (marketing & sales) Mayank Parekh said.

Maruti Suzuki posted 1.9 per cent rise in car sales to 104,073 vehicles in May, its lowest growth since July 2008. Its domestic sales increased 4 per cent to 93,519 cars, while exports declined 13 per cent year-on-year to 10,544 cars in May.

Petrol prices has gone up 32 per cent in the past one-year to Rs 63.37 in Delhi, while the interest rates on auto loans are also up by around 40-50 per cent in the same period. Demand for cars was also hit after several companies raised prices in January and April this year to offset higher raw material costs.

Hyundai Motor India sales jumped 15 per cent to 31,123 cars primarily due to its recently launched Verna sedan. The 15.3 per cent decline in exports to 16,643 units in May brought its overall growth to 2 per cent at 47,766 in May.

The first two months of the new fiscal signal slowdown after the sales grew at a record 30 per cent to over 25 lakh vehicles in FY’11. The auto industry expects 12-14 per cent growth in sales as higher financing, fuel and car prices caused by soaring steel, rubber and other input costs-discourage buyers.

Country’s largest auto company, Tata Motors, passenger vehicle sales in May dipped 9 per cent 19,401 units from 21,324 units in the same month last year. The major impact came from 35 per cent decline in sales of Indica to 5,497 units. Sales of Nano rose 84 per cent to 6,515 units.

American carmaker General Motors India also reported a marginal 1.3 per cent growth in sales to 8,329 in May this year. While Europe’s largest carmaker Volkswagen sold 6,185 vehicles in May as sales grew with good demand for its Vento sedan.

Battling component shortages, Japanese carmaker Toyota Kirloskar Motor reported 24 per cent jump in its sales to 7,470 units in May.

Honda Siel cars sales dipped 43 per cent to 2,334 cars in May as the company faced sever shortage of critical parts from Japan for its City and Jazz cars.

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