Sales dropped 7 percent in April, first in 10 years.
R Chandrasekaran
CHENNAI: Even as the big automobile companies are lining up their new car model launches, April witnessed a disappointing sales number for cars in India, dropping 10 percent from the year-ago month.
In May alone, at least three companies have launched their new variants. On May 6, the German-based BMW unveiled 7-series facelift in the luxury segment. Two days later, Honda launched new variants of Brio with key upgrades to make it more convenient and comfortable for its customers. A day later, on May 9, the U.S.-based General Motors launched multi-purpose vehicle Chevrolet Enjoy for the Indian customers.
These launches besides more to follow suit comes at a time when the automobile sector is reeling under pressure from different perspectives. One of the most sensitive factors forcing the consumers to delay or postpone new car purchase is high interest rates. This apart, the rising fuel costs in a sluggish economy has also forced customers to remain calm.
Industry body, Society of Indian Automobile Manufacturers (SIAM) said today that about 150,789 cars were sold in April. This is a 10.4 percent drop from 168,354 units sold in the previous year.
However, total two-wheeler sales rose modestly by 0.95 percent to 1,168,080 units from 1,157,114 units despite motorcycles segment recording a fall of 2.06 percent to 843,889 units from 861,608 units in April last year.
Similarly, total commercial vehicle sales advanced 0.75 percent to 56,678 units from 56,257 units in the same period. This could probably be due to the government’s purchase of buses for public utilities, apart from the transporters replacing their existing fleet as the new financial year commenced in April.
Commenting on the car sales number, SIAM senior director Sugato Sen reportedly said, “car purchase is always a discretionary purchase, I can always postpone it. That is what is happening.” The industry body expects car sales to record 3 – 5 percent uptick in the financial year ended March 2014.
Since more than 80 percent of cars sold are financed by lenders, consumers are waiting for the interest rates to come down before making a decision. SIAM sees favorable sign after 3 – 4 months’ time.
For the year ended March 2013, sales dropped 7 percent, which was first in 10 years. General Motors and Ford, which resurrected after Toyota dealt a blow in their backyard, recorded a growth of 30 percent only a couple of years ago.
While India continues to offer growth opportunities, favorable climate eludes purchase of new vehicles in the current economy. The current launches confirm the confidence of the car makers in the Indian market.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com