Auto News

June car sales skid on inflation woes, higher rates and fuel costs

By Motortrend India Staff   |   03 July,2011

Market leader Maruti Suzuki reported its first drop in sales in more than two-anda-half years in June as spiralling interest rates, fuel costs and food prices slowed down the Indian car market drastically after two years of exceptional growth.

Car sales in June are expected to have grown just 3-4 percent, the lowest in two years-after two of the top three carmakers reported a fall in sales as several prospective buyers postponed their car purchases.

Maruti Suzuki reported a 3.8 percent year-on-year decline in its domestic sales at 70,020 cars, partly because of a crippling strike at its sedan plant at Manesar, while third-largest carmaker Tata Motors’ sales slumped 21 percent to 21,993.

Hyundai Motors reported an 11percent jump by selling 30,402 cars in June. “While the market has not changed, the overall sentiment is affected by the underlying cautious sentiments where consumers are postponing purchase,” a senior Maruti Suzuki executive said. “It’s a challenge to revive sales in next few months and some turnaround could be expected during the festive months,” the person added. Carmakers expect sluggish growth in the monsoon months before the festive season in September and October revive consumer sentiment, backed by some new models.

Maruti Suzuki’s sales were primarily affected by a 13-day long strike at Manesar plant, and the periodic shut down of its plans that led to a production loss of over 30,000 cars in June itself. Its total sales fell 8.8 percent to 80,298 cars in June after exports shrunk by one-third to 10,278. The worst affected were sedans SX4 and DziRE, which are made at Manesar. Their sales declined 60 percent to 3,199 units in June, down from 8,081 cars a year earlier. Sales of compact cars such as Alto, WagonR, Estilo, Swift, A-Star and Ritz too slowed drastically to just 2.4 percent at 52,599 cars.

Tata Motors reported a 29 percent slump in the sales of the world's cheapest car Tata Nano to 5,451 units, while Tata Indica sales fell 9 percent to 8,188 cars and the Indigo sedan sales slipped 35 percent to 4,882 cars in June.

India has been one of the two fastest-growing car markets along with China in recent times, with sales rising 26 percent in 2009-10 and 30 percent last fiscal. The growth started to slow in April when sales grew 13 percent. In May, the sales grew percent. Growth in June would be the latest since May 2009 when car sales rose just 2.77 percent.

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