Compounding the woes of car makers facing a sales slowdown, the festival season has proved to be a dampener so far, failing to revive the market despite the much-hyped launches. Large auto sector lenders such as HDFC Bank and ICICI said there wasn?t much spurt in the loan offtake compared with the rest of the year. This is significant given that financing today accounts for 70-80% of car sales in urban areas.
This spells trouble for the auto industry, which was hoping for the festive demand to be the saviour this fiscal. Car sales growth has been flat in the first half at 9.09 lakh units, though overall? passenger vehicle sales were up 7% to 1.27 million largely boosted by a 56% jump in demand for diesel-driven utility vehicles to 2.55 lakh units.
?Navaratra sales have been very poor, with most of the new launches not making much of an impact,? an HDFC bank official said.
HDFC is the largest player in the R1,200-1,300 crore (annually) car loans business, followed by ICICI. The National Capital Region accounts for about 45% (or R600 crore) of this market, of which HDFC claims to have close to half.
A State Bank of India official said that the market is not as buoyant as expected, but the pubic sector lender has managed to make strong gains after having processing fees on loans this month and reducing interest rates a few months back. ?There was an increase in both home and auto loan disbursals, but it basically meant that we got a larger share of the business last month instead of the overall pie growing,? he said.
Poor performance this season will mark the second consecutive year of a slow down in sales during the festival season that usually starts from end-September and continues till November.
Siam director-general Vishnu Mathur said that the market will continue to be depressed till the end of the year, but might pick up if there are favourable announcements in the Budget.
?The market is still subdued. Sales are flat compared with the same period last year, but up only about 10% compared with the other months this year,? P Balendran, vice-president at General Motor India, said.
Maruti Suzuki and Mahindra & Mahindra (M&M) have been the only two companies that said that they have seen some increase.
Although Maruti?s growth is attributed both to a low base of last year and strong demand for the new version of its top-selling model Alto 800. M&M saw gains both on new launches such as the Quanto compact SUV and the continuing trend where diesel vehicles have been gaining popularity on lower fuel prices versus petrol.
Rakesh Srivastava, Hyundai Motor India?s vice-president for national sales and marketing, said that there has been a 21% jump in enquiries, though the challenge is to convert them to retail sales. Bookings are up 19% as well. ?We would have done better if the macro-economic situation had improved. We expect a positive growth, but it will not be very high,? he said.