Credit squeeze takes toll on auto sales

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New Delhi, Nov 10: For the first time, credit squeeze is pinching the automobile dealers who are now finding it difficult to borrow funds and build up inventory. As a result, there has been a dip of 6.6% in domestic sales at 98,900 units in October as against 1,05,877 units in the same month last year, the highest dip in over three years.

According to the Society of Indian Automobile Manufacturers (Siam), passenger car sales of Maruti Suzuki India, India’s largest car manufacture, went down by 6.4% at 52,153 units as compared to 55,731 units in the corresponding month last year.

Hyundai Motor India, the second largest passenger car manufacturer in the country, witnessed a slower growth of 9.9% at 20,001 units vis-à-vis 18,197 units in October last year, Tata Motors, the third leading player in the industry, registered a flat growth at 14,100 units in October this year as compared to 14,006 units in the same month last year.

“Financing is still a big issue for the auto industry and we are keeping a watch till the end of this month to forecast what growth the industry can achieve this fiscal," Dilip Chenoy, director general, Siam said, adding for the passenger cars sustaining even a single digit growth would be a challenge.

Earlier this year, Siam had projected an overall sales growth of 12-15%, which was revised to 8-10% in September after a dip of 1.17% in passenger car sales in July and 4.3% in August.

While these dismal numbers are the reflection of wholesale dispatch (from the manufacture to the dealer), companies are claiming to have one of the best retail sales (from dealers to the end-users) in the month of October as all major festivals fell in the same month unlike last few years when Dusshera and Diwali were spread over two months.

“While the number of units dispatched from the manufacturers’ end has fallen, the sales at the retail end have gone up in October. In fact, we have sold 74,000 units last months, the highest-even monthly sales so far," says an official at Maruti.

Motorcycles sales were down by 18.17% at 5,38,353 units as against 6,57,874 units last year, while commercial vehicles posted a dip of 35.95% at 28,027 units in the last month as against 43,756 units in the year-ago period. All this pulled down the overall automobile industry in India by 14.42% in October at 8,65,404 units as compared to 10,11,121 units during the corresponding month last year, the biggest dip in almost eight years. “Whatever steps that were taken up by the government and RBI to ease liquidity crunch are not sufficient. They have been used up to correct existing problems in the system and it had not trickled down to the auto industry," Chenoy added.