Interest rate, diesel dereglation affect automobile sales

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SME Times News Bureau | 02 May, 2013
The Indian automobile industry reported lacklustre sales for the month of April due to sluggish market condition, high interest rate and diesel price de-regulation.

Indian passenger car market leader Maruti Suzuki closed last month with three percent lower sales compared at 97,302 units (domestic 90,523 units, exports 6,779 units) in April, down from 100,415 units (domestic 90,255 units, exports 10,160 units) sold in the corresponding month of last year.

Chennai-based automobile major Hyundai Motor reported a decline of 4.3 percent in its overall sales for the month under review at 56,954 units as compared to 54,606 units sold in corresponding month of 2012.

The domestic sales fell by 7.6 percent and stood at 32,403 units from 35,070 units sold in the corresponding month of last year.

"The exports have shown good growth on account of strong demand from non-European markets while the domestic market continues to witness pressure. Though there are signs of recovery with the increase in demand for petrol cars," said Rakesh Srivastava, vice president (sales and marketing), Hyundai Motor India.

"In current difficult times, HMIL is continuously gaining market share with a strong product portfolio of tried and tested brands high on quality and aspirational value."

However, the car manufacturer reported a healthy growth of 25.7 percent in its exports for the last month which stood at 24,551 units, up from 19,536 units shipped out in April 2012.

Mahindra and Mahindra reported a two percent rise in total sales for April at 41,432 units from 40,715 off-take in the corresponding month of 2012.

"We remain cautiously optimistic of the current situation and do hope that with the much awaited and needed reduction in interest rates announcement by the RBI (Reserve Bank of India) next week, the auto industry will look up," said Pravin Shah, chief executive, automotive division, Mahindra and Mahindra.

According to Shah, the budgetary proposal to hike by three percent the excise duty on sports utility vehicles (SUVs), which got parliament's sanction Tuesday, will be detrimental to sales.

"We are extremely disappointed that the additional three percent excise duty on SUVs has not been reversed in the Finance Bill, which would have brought about some cheer and momentum for SUV makers and provided them with a level playing field."

However, the company reported a two percent increase in its domestic sales during the month under review at 39,902 units from an off-take of 39,295 units during April 2012.

Exports of M&M, however, only rose by eight percent and stood at 1,530 units from 1,420 units in the corresponding month of 2012.

Another Indian automobile major Tata Motors closed April with a decline of 14.85 percent in sales which stood at 51,160 units from 60,086 units sold in April 2012.

Meanwhile, the two-wheeler segment major Hero MotoCorp reported a 9.50 percent fall in sales for April, which stood at 499,113 units from 551,557 units sold in the corresponding month of 2012.

"Going forward for the overall industry growth, a lot will also depend on the monsoon and overall economic activity," Anil Dua, senior vice-president, marketing and sales, Hero MotoCorp, said in a statement.

During the month, the company launched its own retail finance arm Hero FinCorp.

Two-and-three-wheeler maker TVS Motor closed last month with sales of 165,214 units, down from 174,455 units in April 2012.

The company said in a statement that it sold 160,502 two wheelers (domestic 142,794 units, exports 17,708 units) last month against 171,551 (domestic 151,181 units, exports 20,370 units) sold in April 2012.

Last month, TVS Motor sold 4,713 units up from 2,904 units sold in April 2012.

The company plans to launch a diesel-powered three-wheeler, a new motorcycle, a new scooter and upgrade products during the course of this fiscal.