The rising fuel costs and inflation has impacted the growth of auto industry in a big way this June. This has been the first time in the present fiscal that the car sales have recorded a single digit growth of 6% against the 17.5% growth in April and 14.3% in May. There has been a drastic fall in the month of June.
The hindrances that have led to the low growth in car sales are the inflationary pressures and rising interest rates. While inflation was perched at 11.63% in the third week of June and the interest rates on auto loans stood at 14.5-15% which has been the highest in the past seven years.
According to figures released by the Society of Indian Automobile Manufacturers (SIAM), “99,738 cars were sold in June 2008 against 94,002 in the same month last year.”
The small car sales structure is nearly 70% of total car market in India. The small cars have faced the lowest growth of 3.6% (68,068 cars) in June against 65,663 cars last year. However, Hyundai Motors is ahead with 34% growth in June over the same month last year this is because of its successful launch of hatchback Hyundai i10.
According to a Mumbai-based auto analyst, “Car leader Maruti Suzuki, which did not launch any small car in the past one year, posted a mere 2.4% growth and sold 48,935 cars as against 47,783 units in the corresponding month last year.”
But there are many car manufacturers who are facing hard-hit by the market conditions sales in June. Tata Motors’ domestic sales declined 5.8% to 13,307 vehicles in June from 14,081 in the same period last year. Even other companies like Mahindra Renault, Ford Motor and Toyota Kirloskar Motors also faced negative sales in June.