Car sales dip 8% in November; firms may cut production

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SummarySIAM expects turnaround only after a new government is formed in 2014.

With car and utility vehicle (UV) despatches (wholesale) plunging over 10 per cent in November due to poor demand, the auto industry has pinned its hopes on a new government at the Centre to spark a revival in consumer demand.

In fact, to reduce high inventory levels, most passenger and commercial vehicle makers, such as Maruti Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra, are expected to lower output in December by opting for maintenance shutdowns and plant closures.

“We are going through a challenging phase. The current situation is unlikely to change till the time a new government comes. At this stage, the current government can’t do anything spectacular to bring about a revival. We knew that the high demand during the festivities were unsustainable under the current economic conditions” Society of Indian Automobile Manufacturers deputy director-general Sugato Sen said.

After a record nine-month decline due to high fuel prices, expensive finance costs and slowing macro-economic growth, car volumes had marginally picked up in August and September because of strong demand during the festive season.

In November, car sales fell 8.16 per cent to 1.42 lakh units. Sales for the overall passenger vehicle segment (including cars, utility vehicles and vans) saw a 10 per cent dip to 2.01 lakh units. Market leader Maruti Suzuki saw a 6 per cent dip in sales while Hyundai posted a 4 per cent decline. M&M’s sales were also down 32 per cent while Tata Motors’ volumes fell sharply by 45 per cent.

In contrast, two-wheelers remained the flag-bearer for the auto industry, carrying forward the momentum from October on the back of strong rural demand after sufficient rainfall across the country. While total two-wheeler volumes were up 5.5 per cent to 12.40 lakh units in the month, scooters led with 25 per cent higher sales. Bike sales grew 1.44 per cent. Hero MotoCorp saw 7 per cent growth while Bajaj volumes fell 28 per cent. Honda’s sales rose 46 per cent.

Commercial vehicle sales, however, continued a steady decline with a 29 per cent drop in November.

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