The Government's move to stop purchases of new vehicles as part of its new cost-cutting initiative, may not cause a large dent on domestic carmakers' sales numbers.

While already facing a demand slowdown arising from increasing petrol prices and high interest rates, the industry feels that the Centre's share of new vehicles purchases is too low to be of much concern.

Players that could be affected include Tata Motors (Indigo, Safari), Maruti Suzuki (Gypsy, SX4) and Hindustan Motors (Ambassador).

This is because these companies sell largely to the Government and related agencies, industry insiders said.

Government's circular

“Purchase of vehicles, including condemned ones, is banned until further orders,” according to a circular “Expenditure Management – Economy Measures and Rationalisation of Expenditure'' issued by the Finance Ministry on Thursday.

Tata Motors, however, shrugged off any major impact of the Finance Ministry's move.

“There are many other States and agencies who we sell our vehicles to,” a company spokesperson said.

Among other major carmakers in the country, Hyundai sells only about 100 cars a year to the Government. “Since the market is depressed, this circular will further dampen sales,” a company official said.

>roudra.b@thehindu.co.in

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