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A depressed market sentiment largely because of the petrol price rise and high interest rate environment has led most carmakers to record only a modest growth in May.
After the bonanza in March this year, when car sales were up 20 per cent, this is the second consecutive month where the performance has been below expectations - April sales hit a 10-year low at three per cent growth.
“Though fuel prices went up by the end of the month, there had been a lingering fear from the start of the month that a rise was around the corner,” an industry executive said.
“What is happening today is even less than what we expected at the start of the fiscal. Though the second-half may pick up, maintaining a 10-12 per cent annual growth may prove tough,” a Society of Indian Automobile Manufacturers (SIAM) official added.
Market leader Maruti Suzuki saw sales dip four per cent, led by a 29 per cent drop in sales for popular petrol compact models Alto, WagonR, A-Star. SX4 sales went down even more sharply at 85 per cent, while the utility vehicle segment helped pick up volumes on the back of the new Ertiga MUV.
Hyundai saw sales going up three per cent on the back of the Verna and Eon models, and the extensive discounts and schemes offered on petrol models such as the Santro and i10.
“Diesel engine capacity is very low in the industry, plus people are scared to invest because of the uncertain policy environment,” the SIAM official added.
The Petroleum Ministry has been pushing for higher excise duties on diesel cars to offset the losses suffered by oil marketing companies on selling subsidised fuel.
However, a Finance Ministry official has denied any plans of such a move.
Players with a strong diesel portfolio continued to do well. Mahindra saw sales going up 27 per cent, though Tata Motors' six per cent sales growth came largely on a 31 per cent rise in Nano sales. Meanwhile, with full capacity on-stream, Honda Siel's popular Brio and City models pushed up over four times (10,334 units). Toyota Kirloskar also saw sales doubling on the back of strong fleet/taxi sales of the Innova and Etios range.
US-based Ford and General Motors, however, posted a 14 per cent (6,036 units) and 27 per cent drop (6,079 units) in sales. Luxury carmaker Audi saw sales going up 10 per cent to 450 cars.
Among two-wheeler makers, Hero MotoCorp saw for the 10{+t}{+h} consecutive month 5 lakh plus sales – growth of 11 per cent. The company expects a good monsoon to perk up demand in the coming months. Erstwhile partner, Honda Motorcycle also posted a strong 52 per cent growth, led by a rise in scooter demand.
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