Car sales slide 21% in Oct, MUL hit most

Car sales slide 21% in Oct, MUL hit most
EEB & REUTERS

NEW Delhi, NOV 21: Indian car sales fell 21 per cent in October with the country’s largest car maker Maruti Udyog Ltd suffering the biggest drop, figures from the Society of Indian Automobile Manufacturers (SIAM) showed on Tuesday.

Sales of cars in October tumbled to 38,028 units from 48,200 a year earlier, SIAM said in a statement. Sales in the April-October period fell 1.6 per cent to 342,922 units from 348,614 units in the same 1999 period.

Sales of cars by Maruti slid in October to 18,721 units from 29,126 a year earlier. Production was affected by a lengthy protest by workers demanding better benefits but the carmaker has also been hurt by competition from South Korean carmakers.

Part of the reason for the slide in overall car sales was that “customers advanced their purchases during the last six months to take advantage of freebies and concessions,” a sector analyst at a domestic brokerage told Reuters. “Car firms saw bottomlines eroding because of that and are now trying to do away with handouts, making car buying unattractive,” he said.

Curtailed spending: The analyst said consumers had also curtailed non-essential spending and added he would not be surprised if negative growth in the sector continued. Analysts said the overall decline in October was also due to fiscal reasons as purchases in September, the last month of the half year, qualified for higher tax write-offs. BVR Subbu, marketing director at Hyundai Motor, said there had been some softening of demand in October but “the main reason for the fall (in overall sales) is the decline in Maruti’s sales”.

The federal government set up a panel last weekend to oversee the sale of its stake in Maruti which it jointly owns with Japan’s Suzuki Motor Corp. The government needs to move quickly to secure the best price for Maruti as the company’s market share is being hurt by competition from rivals such as South Korea’s Hyundai and Daewoo Motors, analysts say.

Hyundai’s car sales in October rose to 7,363 units from 6,409 a year earlier while Daewoo’s rose to 4,564 from 3,259. Sales of commercial vehicles were 77,890 units in April-October, down from 85,690 in the same period of 1999/00.

Commercial vehicle sales in October alone were 10,994 units against 14,436 a year earlier.

Car industry is likely to experience consolidation as the market cannot support the current large number of players, ratings agency ICRA said. “There is a possibility of a shakeout/consolidation (as being witnessed worldwide), especially in the Rs 450,000-700,000 range... there are too many players chasing too few customers,” ICRA said in the report on Tuesday.