India's car sales slip; bikes zoom 20% in Sep

Domestic passenger car sales declined by 1.8 per cent to 1,65,925 units in September, 2011, from 1,68,959 units in the same month last year.

According to figures released by the Society of Indian Automobile Manufacturers on Monday, motorcycle sales in the country grew by 19.92 per cent during the month to 9,33,465 units from 7,78,351 units in the corresponding month last year.

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Source: PTI and Business Standard

Total two-wheeler sales grew by 24.27 per cent to 12,33,283 units last month from 9,92,383 units in September, 2010, as per the data.

Sales of commercial vehicles grew by 18.04 per cent to 70,634 units in the month under review from 59,836 units in the year-ago period, SIAM said.

Total sales of vehicles across categories registered a growth of 19.39 per cent to 15,71,342 units in September, as against 13,16,118 units in the same month last year, it added.

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Rising prices a deterrent

Auto analysts believe that while auto sales will continue to grow in FY12, some deceleration seems inevitable, as the cost of ownership continues to increase, said a recent Business Standard report.

The last two years have seen auto sales zoom through the roof, taking the base to fairly high levels.

An indication of demand deceleration has come from dealers.

According to an Edelweiss Capital survey, among Maruti and Hyundai dealers, inventory has gone up from 15-20 days to 30-45 days.

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Clearly, there is a build-up of inventory, as the demand has not kept pace with supply. Dealers now expect long-term average growth to settle at 10-12 per cent, contrary to the expectations of 15-20 per cent a quarter earlier.

As of now, automakers are not offering heavy discounts. If sales growth continues to slow down, the discipline may not be observed by automakers and dealers.

This may have an adverse impact on margins, as automakers will have to offer higher incentives to dealers to generate sales.

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Festive season unlikely to bring cheer

The coming festive season is unlikely to bring cheer for the automobile companies, said another Business Standard report.

Leading manufacturers said on they did not expect consumer demand to rev up sales substantially this October, because of uncertainties over increasing lending rates and fuel prices, said the report.

On the back of strong demand during the festive season automobile sales had touched a record high last October, with the industry growing 46 per cent to report sales of 14,60,655 units during the month.

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HMIL, the country's second-largest car maker, which had earlier announced plans to cut down on exports to cater to demand in the domestic market, is now taking a re-look at its exports strategy and pushing sales overseas to counter the slowdown in the domestic industry.

Over the last two months, HMIL's volumes in the domestic market declined by nine per cent to 52,319 units as compared to the corresponding period last year. Exports have grown by 11 per cent to 48,378 units.

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Companies showering freebies

In keeping with this present trend, car manufacturers and even dealers are offering freebies and discounts, which may compel one to loosen one's purse strings. 

Buy a base version i20, costing Rs 540,000, and manufacturer Hyundai Motors will pay for 200 litres of petrol this festive season, a saving of Rs 12,800.

On an i10, one can get free insurance, extended warranty and cash discounts. 

Maruti is using cash discounts of Rs 25,000 to fast-sell the Alto's base model.

The amount increases by Rs 15,000 in case of an exchange and another Rs 3,000 if a corporate customer.

That adds to Rs 43,000, for a car worth Rs 3,18,000. 

Offers on Volkswagen's Polo Breeze and Vento Breeze include select features like a satellite navigation system, rear park distance control, touchscreen multimedia player with GPS and USB, besides free accessories at no extra cost.

Or one could opt for a cheaper interest rate, of 6.99 per cent. 

It remains to be seen what effect will these incentives have on the sales figures.