The festive season has failed to lift car sales in India as continued negative streak made the 4.7% decline in the April-September period the sharpest fall since 2002-03, with the decelerating market conditions leading to a negative year for the industry. According to data released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday, 8.55-lakh cars were sold in the first six months of the current fiscal against 8.97-lakh units in the corresponding period last year.
Sales have been negative since November 2012 except for a minor positive blip in August on strong performance by Maruti Suzuki.
SIAM struck a cautious note saying it is unlikely passenger car sales would post positive growth this fiscal under the current economic conditions, with high interest rates and rising fuel prices dampening consumer sentiments. "Interest rates are still very high, though therupee movement seems to have stabilised now,"
SIAM president Vikram Kirloskar said. SIAM, the lobbying body of the industry, said car sales are likely to be negative in the current financial year ending March 2014, revising an earlier forecast of a 3-5% growth. Carmakers, too, are not bullish, with September sales clocking just a 0.7% growth at 1,56,018 units. A slight turnaround in the festive season that kicked off with Onam in Kerala on September 16 has failed to lift sentiments. "In the current market scenario, volume growth is a big challenge.
We expect the challenges to continue and are cautiously optimistic for the festive season," said Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai Motor India. The Indian auto industry is facing a second consecutive year of decline, largely impacted by rising fuel prices and high interest rates that forced consumers to delay fresh spending in a slowing economy. Amit Kaushik, principal analyst (auto) at IHS Automotive, said: "We see the current sales rebound as temporary seasonal adjustment on account of expected festive demand. The current market seems to be more product-oriented instead of being sentiment driven, and innovative products are the key driver of this emerging demand. We expect some fundamental market challenges to continue and don't see any sustained market upturn before the next year's general elections."
Sluggish market sentiments have impacted not just vehicles manufacturers, but the entire industry, including component manufacturers, financers, and dealers, as the tapering demand is affecting jobs in the market. It is expecting some recovery on the back of a strong monsoon, which has increased farm income, and some excitement from new car launches like Ford EcoSport, Hyundai i10 Grand and Honda Amaze that are seeing strong sales. "New cars bring in incremental growth and given the current economic outlook, the industry needs to grow at a pace much faster than what is expected so as to get into a growth path," says Kirloskar, who is also the vice-chairman of Toyota Kirloskar Motor.
The weakening rupee brought cheer on the export front. Cumulative exports increased 5% to 15.19-lakh units in the first half of the fiscal. The sales of two-wheelers proved to be a silver lining for the industry, rising 18% in September to 8.85-lakh units.
Sales have been negative since November 2012 except for a minor positive blip in August on strong performance by Maruti Suzuki.
SIAM struck a cautious note saying it is unlikely passenger car sales would post positive growth this fiscal under the current economic conditions, with high interest rates and rising fuel prices dampening consumer sentiments. "Interest rates are still very high, though therupee movement seems to have stabilised now,"
SIAM president Vikram Kirloskar said. SIAM, the lobbying body of the industry, said car sales are likely to be negative in the current financial year ending March 2014, revising an earlier forecast of a 3-5% growth. Carmakers, too, are not bullish, with September sales clocking just a 0.7% growth at 1,56,018 units. A slight turnaround in the festive season that kicked off with Onam in Kerala on September 16 has failed to lift sentiments. "In the current market scenario, volume growth is a big challenge.
We expect the challenges to continue and are cautiously optimistic for the festive season," said Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai Motor India. The Indian auto industry is facing a second consecutive year of decline, largely impacted by rising fuel prices and high interest rates that forced consumers to delay fresh spending in a slowing economy. Amit Kaushik, principal analyst (auto) at IHS Automotive, said: "We see the current sales rebound as temporary seasonal adjustment on account of expected festive demand. The current market seems to be more product-oriented instead of being sentiment driven, and innovative products are the key driver of this emerging demand. We expect some fundamental market challenges to continue and don't see any sustained market upturn before the next year's general elections."
Sluggish market sentiments have impacted not just vehicles manufacturers, but the entire industry, including component manufacturers, financers, and dealers, as the tapering demand is affecting jobs in the market. It is expecting some recovery on the back of a strong monsoon, which has increased farm income, and some excitement from new car launches like Ford EcoSport, Hyundai i10 Grand and Honda Amaze that are seeing strong sales. "New cars bring in incremental growth and given the current economic outlook, the industry needs to grow at a pace much faster than what is expected so as to get into a growth path," says Kirloskar, who is also the vice-chairman of Toyota Kirloskar Motor.
The weakening rupee brought cheer on the export front. Cumulative exports increased 5% to 15.19-lakh units in the first half of the fiscal. The sales of two-wheelers proved to be a silver lining for the industry, rising 18% in September to 8.85-lakh units.
Credits: economictimes
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