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Domestic car sales down 15.76 pc in July

By Motortrend India Staff   |   10 August,2011

Domestic passenger car sales have fallen for the first time after 30 months of continuous growth, registering a 15.76 per cent decline in July this year mainly due to hikes in lending rates and lower production by market leader Maruti Suzuki during the month.

Car sales in the country stood at 1,33,747 units in July, 2011, as against 1,58,767 units in the same month last year, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Wednesday.

“This is the first time since January, 2009, that car sales have fallen. Interest rates and fuel prices were going up in recent months and that led to an overall negative sentiment in the market,” SIAM Director General Vishnu Mathur told reporters at New Delhi.

The car market last witnessed a fall in January, 2009, when sales shrunk by 3.16 per cent year-on-year. Last month’s decline is the steepest since November, 2008, when car segment sales fell by 19.34 per cent, he added.

The production loss at Maruti’s Manesar facility due to preparations for the launch of its new Swift model and realignment of its DZiRE model’s output also severely impacted sales, he said. Earlier this month, Maruti Suzuki India (MSI) said that due to these two planned activities, sales in July were negatively impacted by nearly 17,000 units. “There is no lack of demand, but just lack of conversion of demand into purchases by customers,” Mathur said.

SIAM Senior Director Sugato Sen said non-availability of certain components like castings also impacted the output of many car-makers. During the month, MSI India posted a 31.04 per cent dip in domestic car sales to 52,483 units.

Rival Hyundai Motor India’s sales were down by 11.49 per cent to 25,501 units. Tata Motors saw a decline of 43.13 per cent in sales to 13,997 units during the month. When asked about the outlook, Mathur said: “Interest rates and fuel prices are challenges for the market. Hopefully, interest rates have reached their peak... If crude continues to soften, then there may be some positive impact as it will lead to inflation coming down.”

The forthcoming festive season is also likely to help car-makers push sales, but to what extent it can boost growth has to be looked at, he added. The auto industry has started slowing down this fiscal, with the passenger car segment growing by only 7 per cent in May. In June, it saw its slowest growth rate in 27 months of 1.62 per cent.

SIAM had last month revised the growth projection downward to 10-12 per cent for 2011-12, as against its earlier forecast of 16-18 per cent.

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