The month of November seems to be the worst month for the car industry. Car sales are expected to dip by 15% in the month, which accounts for the worst monthly falls in the last four years.
The steep fall in sales is mainly due to reluctance of banks to soften interest rates or ease stringent loan lending criteria. This has forced customers to postpone their car purchase with hopes that car prices may go down after the recent appeal by Finance minister P Chidambaram to the automobile industry.
In the month of October, the sales dropped to about 10% as compared to the corresponding month last year. On this senior V.P. Marketing and Sales of Hyundai Motors stated, “The going has become extremely tough and we do not expect the industry to record any growth this month. We are trying to avoid being in the red too. However, I expect the rest of the car industry to be in the negative in the current month.”
Even the liquidity crunch in the market has further added to the worst scenario in the car industry. Car customers are facing difficulty in sourcing credits and are simply pushing back their car buying decision. Recently, in response to the declining car sales, many car manufacturers including Maruti Suzuki had cut down their production. Several car dealers across the country are also left with a huge inventory of unsold cars. These dealers are struggling to clear stocks by offering discounts and schemes.
Vice President of Honda Seil Cars India, Jnaneswar Sen, said, "All our models, except the new City, are not doing well. Sales have been down drastically and well-to-do consumers are coming into showrooms but are disappointed due to lack of adequate financial provision. We do not foresee a helpful period."
Under this kind of a situation, when the sales are drastically dropped, analysts feel that the month of November will put a clear picture of the actual impact of economic turmoil.