Car sales jump 7% in Nov; bad months ahead, warns Siam

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SummaryThe entry-level car segment, which is the biggest contributor to sales, has been hit most because of fuel hikes and rising interest rates.

Domestic passenger car sales witnessed a turnaround in November after four consecutive months of contraction, rising by 7 per cent on the back of a marginal revival in demand, coupled with a low base.

According to figures released by the Society of Indian Automobile Manufacturers (Siam) today, domestic passenger car sales stood at 1,71,131 units in November, as against 1,59,939 units in the same month last year. “Domestic car sales have bounced back as the base in November last year was low. Also, we have seen some revival of demand in last month,” Siam senior director Sugato Sen said. However, sales in December are likely to be lower than in November, he said.

According to the Society of Indian Automobile Manufacturers, the passenger car segment may not even see single-digit growth in the current fiscal.

“During the Auto Expo next month, we are going to revise our sales projections for the fiscal ... I feel the passenger car segment will again be downgraded,” Sen said. In October, Siam had significantly lowered its passenger car sales growth forecast for 2011-12 to 2-4 per cent, the second revision after pegging it at 10-12 per cent in July, as against its projection of 16-18 per cent announced at the beginning of the current financial year.

“The entry-level car segment, which is the biggest contributor to sales, has been hit most because of fuel hikes and rising interest rates. This is the most sensitive segment. However, demand in the upper-end segment is comparatively doing well,” Sen said.

Car sales in India have been declining on a year-on-year basis since July, mainly due to the severe impact of labour issues on the country’s largest car-manufacturer Maruti Suzuki India’s (MSI) production.

Sales registered steepest monthly decline in nearly 11 years in October, tanking by 23.77 per cent on account of a drop in MSI’s output due to labour trouble, coupled with high interest rates and fuel prices. MSI’s domestic sales declined in November as well, dipping by 16.59 per cent to 73,078 units from 87,618 units in the same month last year, Siam said.

However, the strong performance of other manufacturers made up for the slippage in MSI sales in November. Rival Hyundai Motor India posted a 10.72 per cent growth in sales to 34,878 units in November, 2011, from 31,501 units in the same period last year. Tata Motors also reported a jump in sales to 23,540 units from 12,234 units

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