Festivals may fail to perk up car sales

Written by Ronojoy Banerjee | Ronojoy Banerjee | Rajat Guha | Rajat Guha | New Delhi | Updated: Sep 8 2011, 09:01am hrs
Despite the festival season on the anvil car makers have ruled out any significant turnaround for the industry since high interest rates and fuel costs continue to make customers vary of new purchases.

Director (sales & marketing) Hyundai Motor India Arvind Saxena said, The market is very tough. Fuel prices and interest rates are impacting the affordability of car buyers. We hope the festival season to generate demand, but I doubt whether it would create any significant change in the sales.

Saxena added that even if car makers dole out lucrative discounts it would not be enough to generate demand. Hyundai, the countrys second largest car maker, reported a 6.7% drop in sales for August to 26,677 units against 28,601 units in the corresponding month last year. This was the companys first dip in sales since the start of the financial year. Earlier, Maruti Suzuki chairman RC Bhargava, too, had ruled out any significant change in sales owing to the festival season.

Chief executive (automotive division) and member of the group executive board of Mahindra & Mahindra Rajesh Jejurikar said that current moderation in sales would not alter M&Ms plans to introduce the sub-four meter car which is being developed on the companys Verito platform.

The last few months have not impacted us so much since we mainly cater to the semi-urban markets (with SUVs like Scorpio, Xylo and Bolero). Also our vehicles are in the R6-lakh plus range. This segment is not as sensitive to interest rates when compared with the lower segments, he said.

While other car makers reported a drop in August sales, M&Ms sales increased 13.5% to 15,664 units compared with 13,796 units in August 2010.

Senior vice-president (sales & marketing) of Honda Siel Cars India Janeshwar Sen said the company expects to beat the slowdown blues in the festival season with the launch of its small car Brio.

The company also recently launched its refurbished Jazz, which it hopes could increase volumes for the company. He, however, said that the company is still facing shortage of components from Japan because of the tsunami that hit the country earlier this year.

Supply constraints would affect us till December this year. Thats a concern for us. However, the slowdown is temporary in nature, he added.

President of Society of Indian Automobile Manufacturers (SIAM) Pawan Goenka said that the industry was hoping that the months of September and October could reverse the trend of a slowdown in car sales.

The festival season is very critical for the industry. If we can achieve double digit growth then it would help the industry to fight the current slowdown, he said. In fact, Goenka said that Siam could revise its growth projection for passenger cars from its earlier forecast of 10%.