Car sales fall in January, no respite seen - industry body

Last Updated: Tue, Feb 11, 2014 08:15 hrs

Car sales in India fell 7.6 percent in January, the fourth straight month of decline, according to figures released by the Society of Indian Automobile Manufacturers (SIAM), in a market set to fall for the second straight year.

Car sales fell to 160,289 vehicles Last month, the industry body said, as consumers kept a tight lid on spending, hurt by high interest rates and fuel costs in a slowing economy.

Sales have fallen 5.2 percent so far this fiscal year that ends in March.

"There is no respite," said Sugato Sen, SIAM's deputy director general.

Sales of passenger vehicles, which include cars and utility vehicles, fell 9.3 percent in January.

Utility vehicles were a bright spot in the auto market a year ago, but an increase in factory gate duties and rising prices of diesel, which is commonly used to power such vehicles, has hit their sales as well.

Sales of motorcycles rose 4 percent last month to 922,323, while commercial vehicle sales were down 20.9 percent at 49,987, SIAM said. Demand for trucks and buses has been hit hard as industrial production and economic activity slows.

The volume decline in passenger and commercial vehicles, which started in the second quarter of fiscal 2012, may continue in the fiscal year that starts in April, India Ratings & Research, a unit of Fitch Group, said in a recent note. However, the volume growth rate may turn positive after September, it said.

Demand for cars has fallen, particularly in urban areas, with the economy growing at its slowest pace in a decade.

Still, consumers in rural areas, where incomes are being partly boosted by strong monsoon rains, are helping some companies such as Maruti Suzuki, the country's top carmaker, offset the slowing sales.

While there are no signs of an immediate recovery, the auto industry is hoping that the government may cut factory gate duties when it presents the interim budget, Sen said.

Finance Minister P. Chidambaram is widely expected to announce measures, including a cut in factory gate duties on some products, to push up manufacturing output when he presents an interim budget for the coming fiscal year in parliament on February 17.

Automakers are also betting that pent up demand and new vehicle launches, many of which were unveiled at the ongoing auto show in the outskirts of New Delhi, will help boost sales, especially after a general election due by May.

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