Car sales set to decline in FY13, first time in decade

Domestic annual car sales are set to be in the negative territory for the first time in a decade with industry body SIAM on Monday saying it's growth forecast of 0-1 per cent for this fiscal will not be met as gloomy macro-economic factors and negative sentiments continue to hit demand.

The statement by Society of Indian Automobile Manufacturers (SIAM), comes on the back of January numbers also showing a decline of 12.45 per cent, the third consecutive monthly decline since November last year.

According to its latest data, domestic passenger car sales declined to 173,420 units in January this year compared to 198,079 units in the same month of 2012.

Worried by the performance of the industry, SIAM called for government intervention in the form of reduction in excise duties in the Budget and special schemes for commercial vehicles under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to boost the sector.

"The way car sales are at the moment, we may not be able to meet the forecast of 0-1 per cent growth for the domestic passenger cars we made last month. It will be in the negative territory this fiscal," SIAM Director General Vishnu Mathur told reporters here.

In January SIAM had lowered car sales growth projection to just 0-1 per cent for this fiscal, from 1-3 per cent and 9-11 per cent announced in October and July, 2012 respectively. In April last year, it had forecast a growth of 10-12 per cent for 2012-13.

The last time car domestic sales witnessed a decline was in 2002-2003, when it dropped by 2.09 per cent, he added. In between, the lowest growth was witnessed during the 2008-09 global downturn, when car sales in the domestic market grew by just 1.39 per cent.

"In the April-January period this fiscal, the domestic passenger car sales have declined by 1.8 per cent to 15,56,283 units compared to the year-ago period. The overall economic situation is low and the consumer sentiments are deeply negative despite the recent notional rate cuts by the RBI," Mathur said, adding even new model launches have not been able to have a major uplifting impact.

He said the auto industry has put forward demands to the government to reduce excise duties on small cars to 10 per cent and big cars to 22 per cent in the upcoming Budget.

"Also we have asked for special schemes under JNNURM, as was done in 2008-09 to support state transport undertakings to purchase new buses for fleet upgradation,"

Mathur added.

In January all the major car makers struggled to post good sales numbers. Market leader Maruti Suzuki India posted a marginal rise at 88,557 units from 88,377 units in the same month last year.

Rival Hyundai Motor India Ltd had posted 1.45 per cent growth at 34,247 units as against 33,756 units last year, while Tata Motors' domestic sales crashed by 60.76 per cent to 11,192 units from 28,529 units in January last year.

According to SIAM, motorcycle sales in January this year grew by 7.45 per cent to 886,527 units from 825,050 units in the same month of previous year.

Market leader Hero MotoCorp (HMC) had posted sales of 494,109 units as against 4,66,110 units in the same month last year.

Rival Bajaj Auto posted sales of 196,023 units as compared to 202,214 units in January last year, while that of Honda Motorcycle and Scooter India (HMSI) was at 105,968 units as compared to 68,212 units in the year- ago month.

Total two-wheeler sales in January 2013 increased by 8.46 per cent to 12,06,937 units from 11,12,767 units in the same period of previous year, SIAM said.

Scooter sales were up by 12.24 per cent in January this year at 252,094 units as against 224,612 units in the same month last year.

"The growth we are seeing in the two-wheeler sales is mainly driven by the scooters segment as demand continues to come from urban areas. Moreover, with some companies expanding their production capacities, the pent up demand for scooters has been addressed," Mathur said.

During the month, market leader HMSI had scooter sales of 110,757 units as against 108,927 units last year, while that of HMC was at 53,732 units as against 39,239 units in the year-ago month.

Total sales of commercial vehicles during the period declined by 9.51 per cent to 63,218 units from 69,865 units in the year-ago period. Three-wheeler sales during January stood at 48,519 units as against 45,633 units last year, up 6.32 per cent.

"Usually, the commercial vehicles segment is an indicator of the health of the economy and the numbers in the segment clearly shows something is wrong in the economy," SIAM Deputy Director General Sugato Sen said.

According to SIAM total sale of vehicles across categories registered a growth of 5.31 per cent to 15,61,104 units in January 2013 as against 14,82,437 units in the same month of 2012.

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