No festive cheer for car makers, industry expects to end up in red

Written by fe Bureau | New Delhi | Updated: Nov 2 2014, 07:09am hrs
CarMarket leader Maruti Suzuki posted just a 1% growth to 97,069 units. (PTI)
Car sales in the festive month of October have been a dampener, with the overall industry surprisingly expected to end up in the red after five straight months of growth since May this year. Market leader Maruti Suzuki posted just a 1% (despatches to dealers) growth to 97,069 units, though it said retail sales have been relatively better at 10%. Second-largest player Hyundai recorded 6% higher sales at 39,010 units.

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This marks the fourth consecutive year of poor festive season sales, and is especially disappointing since hopes had been high for a strong demand at a time when car demand is already at a decades low. In a good year, festive season (September-November) growth is about 20%, while the auspicious period accounts for 35-40% of carmakers annual volumes.

Owing to festivals and state elections, during October 2014 Maruti Suzuki had only 19 working days. This limited the availability of vehicles during the month. In exports, shipment of around 1,000 units to Algeria and Egypt was rescheduled to November due to cyclonic conditions in the Gujarat area, a Maruti statement said.

Added Rakesh Srivastava, senior VP, sales and marketing, Hyundai, We anticipate that the positive momentum would build up further with increase in sales of first-time buyers if there is a strong promise of improvement in economic and macro factors in rural and urban markets.

Honda continued its growth trajectory on the back of the new City and Mobilio models with an 18% jump to 13,242 units. Jnaneswar Sen, senior vice-president, marketing and sales, Honda Cars India, said, We have clocked excellent sales during the year so far, where all our products have received tremendous response. Starting November, the Tapukara plant will start operations in the second shift, thereby ensuring better availability of the Honda City.

Mahindra, largely a utility vehicle maker which launched its new Scorpio last month, saw a 16% drop to 19,254

units. Tata Motors also witnessed a 19% drop in the month to 11,511 units despite 49% higher sedan segment sales on the back of its new Zest.

Pravin Shah, CEO, automotive division & international operations (AFS), Mahindra & Mahindra, said, Our sales for October remain subdued on the back of overall sentiment and high interest rates. However, I am happy with our retail sales this month, which have helped bring the system stocks to an optimal level. We hope the recently announced deregulation of diesel prices will also support the industry.

Toyota Kirloskar posted a 5% drop to 12,556 units, while Ford saw a 27% drop to 6,723 units. Macro-economic indicators suggest a gradual recovery in the economy, said Anurag Mehrotra, executive director, marketing, sales and service at Ford India. But the positive customer sentiment is yet to translate into vehicle sales, potentially due to high interest rates and inflation. At Ford, we continued to maintain a steady sales momentum with marginal improvement in footfalls over last month.