Domestic Car Sales Down 10.15% in April, Biggest Dip in a Year

Car sales in India dipped by 10.15 per cent in April, the biggest monthly decline in a year, as negative sentiments due to gloomy macro-economic conditions continued to plague demand despite cut on excise duties on automobiles.

Also read: Cars are Taxed More than Cigarettes in India, Says Honda

According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales in April stood at to 135,433 units in April as compared to 150,737 units in the year-ago month.

"This is the biggest decline since May 2013, when car sales dropped by 11.7 per cent," SIAM Deputy Director General Sugato Sen told reporters here.

Explaining the reasons for the continued sales dip despite reduction in excise duty in the Budget, he said: "What is happening is that we are unable to recover from the negative sentiment. We need a trigger to change the sentiment."

In the interim Budget for this fiscal, Finance Minister P Chidambaram cut excise duty to 8 per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles; 24 per cent from 30 per cent for SUVs; 20 per cent for mid-sized cars from 24 per cent and 24 per cent for large cars from 27 per cent.

Sen said the change would be possible only after a new government comes to power and announces measures to kick start the economic growth during the full Budget.

"The current rate of 4-5 per cent growth is not enough.

For a healthy growth of the automotive sector, we need the economy to grow at over 7 per cent," Sen said, adding the forecast of a deficient monsoon is also a concern. Factors like high interest rates, fuel prices and inflation are still affecting demand.

When asked why the reduction in excise duties hasn't resulted in demand surge, he said: "Today, even after the cut, the cost of ownership is extremely high. The small car customers are the most vulnerable under the current circumstances."

Sen, however, said the only positive was that footfalls at dealerships have increased although those have not been converted into sales.

Charting out the auto industry's expectations from the new government, he said roll out of GST, implementation of fleet modernisation programme and greater emphasis on higher economic growth must be top on the agenda.

According to the SIAM data, the country's largest carmaker Maruti Suzuki India witnessed 14 per cent decline in its domestic sales at 65,786 units in April as against 76,509 units in the same month last year. Rival Hyundai Motor India Ltd, however, posted a 8.48 per cent increase at 35,110 units as compared to 32,364 units in April last year. .

Homegrown major Tata Motors' car sales in the domestic market slipped by 36.61 per cent to 5,653 units as against 8,918 units during the corresponding month last year.

Honda Cars India saw its car sales jump by 30.21 per cent to 10,977 units during the month, up from 8,430 units in April last year.

In the two-wheeler segment, total sales in April grew by 11.67 per cent to 13,04,447 units as against 11,68,100 units in the same month last year, SIAM said.

Motorcycle sales last month grew by 8.06 per cent to 911,908 units from 843,909 units in the year-ago period. Motorcycle market leader Hero MotoCorp saw its bike sales grow by 14.57 per cent to 4,95,701 units in April this year. Rival Bajaj Auto, however, saw its sales dip by 16.49 per cent at 1,66,874 during the month.

Honda Motorcycle and Scooter India (HMSI) posted a growth of 13.71 per cent at 1,31,378 units in April this year. The scooters segment continued its robust growth at 3,29,680 units, up 26.08 per cent from 2,61,475 units in April last year, SIAM said.

Market leader HMSI had a growth of 27.53 per cent in scooter sales at 1,70,600 units, while Hero MotoCorp's grew by 13.10 at 62,855 units. Chennai-based TVS Motor Co saw its scooter sales grow by 55.17 per cent to 44,472 units during the month.

According to SIAM, sales of commercial vehicles (CVs) were down by 24 per cent to 43,080 units in April.

Sen said with the ban on mining being lifted, there could be some improvement in the CV segment in the coming months.

Three-wheeler sales during the month declined by 2.17 per cent to 33,602 units as against 34,348 units in the same month last year.

Vehicle sales across categories registered an increase of 6.96 per cent to 15,69,670 units from 14,67,472 units in April 2013, it added.