The Hindu Business Line : Falling CBU sales fail to daunt car producers

IT is a story no car maker wants to tell. But it is becoming increasingly clear that most of the Indian car manufacturers are finding it hard to sell completely built unit (CBU) cars in the country. Sales figures for cars such as Vectra, Forrester and Mondeo show that since their high-profile launch, sales have in fact sunk.

Vectra sold 101 units when it was launched in January. It has now dipped to a mere 25 in June. The much-hyped Chevrolet Forrester sold 52 units when it was launched in March. But its sales fell to a mere 15 units in June. Same is the case with Mondeo whose sales have dipped to 12 units in June from around 27 in February.

While car manufacturers defend their move to import these vehicles, customers are not exactly captivatedby the imported cars. According to dealers, customers would rather pay a few more lakhs and buy the ultimate status symbol Mercedes Benz than spend money on CBUs. They are also not confident about the after sales service and believe cost of ownership is pretty high.

But officials of car manufacturers have a different theory. They believe that as customers' preference change all the time, CBU sales keep fluctuating. "We are happy with the sales of CBUs. They are imported because we believe there is a market for them which could grow over a period of time. Hence we want to be there first," the General Motors Vice-President for Corporate Affairs, Mr P. Balendran, told Business Line.

The Ford India Director for Sales Operations, Mr Vinay Piparsania, believes that a product as Mondeo addresses a niche segment. He said Ford imports Mondeo depending on the demand in the market. ``The idea is not just to sell the product like other cars but to bring a premium product into India which also boosts Ford's profile in the country,'' Mr Piparsania said. In fact Daimler Chrysler, which makes Mercedes Benz cars in India, has a defined CBU programme. The programme is based on the `high image, low volume' concept that will remain different from the company's volume business.

But dealers say that while some of the cars brought through the CBU route was to test the waters, others expected a modest growth of up to 2,000 per year. But sales trend clearly indicate that it may take some more years before such growth can be expected. Mondeo which sold 758 cars in 2002(in December 2001, the month it was launched, it sold as manyas 110 units), has been unable to repeat the success. For January-June 2003 period, Mondeo was able to sell only around 100 units.

Car dealers say that customers' feedback indicates that if these cars were priced lower, the market could have grown further. But CBU programmes are expensive because of validation, homologation and adaptation costs apart from high customs duty which these cars attract, thereby inflating their price by over 100 per cent.

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