Posted in Automotive News & Views

India car sales jump in August, but don’t expect a full year turnaround

Passenger car sales in India in August rose for the first time in 10 months, according to data released by Society of Indian Automobile Manufacturers on Tuesday.

Sales last month rose 15 percent year-on-year to 1,33,486 units. Yet there is no turnaround across the industry. The growth in sales in August was driven by India’s largest passenger car maker Maruti Suzuki, which saw sales accelerate more than 50 percent. However, that jump in sales was only because its sales in August last year, were hit by a workers unrest at its Manesar plant, which led to a death of a HR manager.

Passenger car sales in the country have been impacted more than a year now due to increasing fuel prices and expensive auto loans. There has not been much change in that.

Just end of last month, oil marketing companies raised petrol prices by more than Rs 2 per litre and CNG prices were raised by Rs  3.70 per kg, last week. Diesel prices have been raised by around 50 paise almost every month, since the fuel was partially de-regulated by the government.

High consumer inflation and the overall gloom in the Indian economy has also dented consumer sentiments, which further affects discretionary spends.

Tata Motors, Mahindra & Mahindra, among the top auto makers in the country, reported a sharp decline in sales, last month. Hyundai, the second largest car maker in India, only reported a marginal rise in sales.

There has been strong demand for some of the new launches, Ford Ecosport compact SUV and Honda’s Amaze sedan, in particular. However, Tata Motors’ domestic sales continue to struggle, despite it recently refreshing and upgrading several models. M&M, which saw sales boom last year, amid huge demand for SUVs, is also now facing headwinds with demand tapering off.

Most car makers are offering discounts/benefits on existing products, ranging from Rs 15-20 thousand to over a lack of Rs.

That coupled with the festive season will indeed give some boost to automakers. However, industry body SIAM feels, that will not be enough to drive full year (2013-14) sales in positive territory.

There has been “no fundamental change” that would lead to any change in domestic demand, says Sugato Sen, SIAM’s deputy director general.

The industry body is likely to revise its FY14 sales forecast next month and expects overall figures to remain negative.

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Author:

I am a business journalist by profession and have close watch on equity markets and developments across FMCG, Retail, real estate, auto and information technology sectors in India. When not writing, I am an avid photographer (instagram.com/nachiket.kelkar) and Arsenal FC fan. I also love train spotting.

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