Auto News

Car Sales Decline by 26 Percent in February 2013

By Motortrend India Staff   |   13 March,2013

The car sales in India have declined by 26 percent in the month of February 2013 as compared to the sales in the month of February 2012. This has been reported as the biggest fall in the past 12 years. The fall has resulted due to the weakened economy and increased fuel cost.

Car manufacturers sold 158,513 units in February compared with 213,362 in the same month a year ago, the Society of Indian Automobile Manufacturers (SIAM) said on Monday. It was the fourth consecutive monthly slide and the worst performance since December 2000, when sales had plunged 40 per cent.

SIAM said car sales could decline by a larger margin for the full fiscal year as all industry segments are showing signs of deceleration.

"There is no incentive to buy new cars or replace the older ones. We expect the slowdown in sales to continue for the larger part of 2013, beyond the current fiscal year that ends in March," SIAM deputy director general Sugato Sen said.

"The real impact is felt more at the bottom of the pyramid for people who buy the smaller cars as demand for entry level compact cars have dropped significantly."

Demand for vehicles in India, a barometer of the country's economic health, is led by a middle class that mostly bases its decision to buy on the price of fuel and loans.

While interest rates continue to be high, automotive fuel prices have risen almost 30 percent in the last 12 months. With the February drop, SIAM's warning last month that the domestic industry could be headed for its first fall in annual sales in a decade seems certain now. In 11 months, SIAM has revised its car sales growth forecast for the current fiscal to 0-1 percent from 10 per cent-12 percent in April 2012.

The domestic automotive industry, which has been demanding measures to shore up sagging sales, faced disappointment last month when the Union budget raised taxes on sports utility vehicles, imported cars and motorcycles, and did not offer any sops.

"Utility vehicles have shown consistent growth with demand pitching in from the younger customers. The budget proposal to increase excise duty from 27 percent to 30 percent would increase the divide with hatchbacks and sedans and hamper future growth," said Rakesh Srivastava, vice-president (marketing & sales) at Hyundai, the country's No. 2 carmaker.

To cope with the slump in demand, carmakers Maruti Suzuki, Tata Motors and General Motors have implemented production cuts.

Related Content