Car sales crash first time in 10 years

NEW DELHI: Is India losing its shine in the global car market? Car sales crashed to a negative in 2012-13, the fall coming after a decade, as the slowing economy and continuance of high interest rates kept buyer sentiment at its lowest. The industry is already worried as frequent production cuts and halt in investments are raising doubts over the earlier perception of India being one of the biggest-potential car markets in the world. Demand for new cars has remained weak for most parts of the fiscal, and March did not prove to be any different. The fall in March will be the fifth straight month of decline for the car industry. Maruti, Hyundai and Tata Motors — among the country's top auto makers — all finished March with negative volumes (year-on-year) and the industry is pinning hopes on new launches like Honda Amaze sedan and Ford Eco Sport SUV for incremental numbers. The last time the Indian car market was in the red was in 2002-03 when it fell by 2.1%. The fall in 2012-13 will be even sharper as the contraction has been much more now, sources said. "A recovery is not coming anytime soon. The tough times will continue in the coming months," a top official at one of the country's leading car company, said while requesting anonymity. While Maruti saw numbers slip by 4% at 1.07 lakh units, Hyundai, the country's second-biggest maker, saw domestic market numbers go down by 14%. Tata Motors also continued to stay in troubled waters as its passenger vehicle volumes crashed by 67% in March (at 12,347 units). For the second month in a row, Tata Motors — once the second-biggest passenger vehicle maker of the country — lagged Toyota in overall volumes. High interest rates and slowing economy have been the biggest dampeners for the car market. The spurt in fuel prices has only added to the woes of buyers who have remained away from the market for most part of the fiscal year. "The slowdown of economy is impacting vehicle sales. Against the large base of last year, there was a sharp drop in conversion of enquiries in the absence of any positive stimulus and sentiments. We foresee the pressure on volumes to continue till there is significant improvement in macro-economic factors," said Rakesh Srivastava, VP (Sales and Marketing) at Hyundai India. Companies say that the market is expected to remain edgy over the coming months too and any improvement can be expected only when the RBI goes for a significant cut in interest rates or the economy shows some concrete signs of improvement. There is pressure at retail outlets as people stay away from new buys even as dealers and companies are offering lucrative discounts and attractive offers. "There has been a drop in walk-ins at showrooms and conversion to sales (of inquiries) are taking time. Overall, there is a problem," said Kamal K Kumar, COO of Competent Motors, one of Maruti's top dealer in Delhi. The only hope for the car market is the growing love of Indians for SUVs and utility vehicles, something validated by the success of models like Renault Duster and Maruti Ertiga. Continued demand in this category as well as new launches are expected to give some respite from the slowdown. Ford will launch its mini SUV Eco Sport in June while others planning a compact off-roader include Hyundai, Maruti Suzuki, Mahindra & Mahindra and General Motors. But the car market has some distance to cover before seeing any recovery. "The market continues to be slow, and is expected to remain sluggish in the coming months," said Sandeep Singh, Deputy MD at Toyota Kirloskar Motors. Other companies also feel the same. P Balendran, VP at GM India, said, "We are not expecting any improvement in the short term but there can be some movement during the festival season which is also possible only if the interest rate come down and economic situation improves." Source: TOI