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The domestic passenger car sales continued to fall for the seventh consecutive month, giving rise to worries that the industry may resort to lay-offs to cut costs.
According to the Society of Indian Automobile Manufacturers (SIAM), sales of passenger cars fell by 12 per cent to 1.43 lakh units in May against 1.63 lakh units in the corresponding month last year.
Worrying times
“This is the longest stretch of consecutive decline in car sales we have witnessed.
“Even during the 2008-09 downturn, there was no such prolonged period of fall. These are worrying times for the automobile industry,” said Vishnu Mathur, Director-General, SIAM.
He said the situation in the industry was such that companies may lay off people to cut cost.
Led by market leader Maruti Suzuki India, car sales of companies such as Fiat India, Ford India, General Motors India, Mahindra & Mahindra, Nissan Motor and Tata Motors declined in the month as compared to May last year.
However, sales of Honda Cars India, Renault India and Volkswagen India grew during the month.
Motorcycles sales also declined, by around one per cent to 8.81 lakh units during the month against 8.87 lakh units in May 2012. But, overall two-wheelers sales rose by one per cent to 12.06 lakh units last month compared with 11.92 lakh units in same month previous year.
Commercial vehicles sales declined by 11 per cent to 55,458 units during the month from 62,032 units May last year.
Grand total of all categories declined by one per cent 14.98 lakh units in May as compared with 15.12 lakh units in the same month previous year.
Rupee impact
According to analysts and companies, factors such as rupee depreciation against the dollar may impact vehicle sales, if the similar rates continue.
“If it continues, fuel prices will also go up and B and C segment of cars (compact hatchback and compact sedan) will have lot of impact as many critical components are imported,” said Kumar Kandaswami, Director of consultancy firm Deloitte Touche Tohmatsu India.
Input costs
“Any increase of input costs may lead to a further drop in an already stagnating demand. Compounded with the depressed market conditions, margins also will be under squeeze in the medium term,” said R. Sethuraman, Director – Finance & Corporate Affairs, Hyundai Motor India.
ronendrasingh.s@thehindu.co.in
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