Small cars pull July sales down 16%

Car sales slumped 16 per cent last month to 133,747 units due to high interest rates, fuel prices and stoppage in production of Swift and Dzire, Maruti Suzuki’s two large selling models.

Small cars were the worst hit sending industry to biggest fall in nearly three years as entry-level customers that are most susceptible to increasing interest rates postponed car buying. In July 2010, country had absorbed 158,767 cars, according to Siam (society of Indian automobile manufacturers).

However, truck and bus sales increased 24 per cent at 64,241 units in July 2011 buoyed by robust light truck sales compared to year-ago month in which 51,934 units were sold.

Sales of entry-level small cars priced up to Rs 3.5 lakh including top selling Alto and Santro were most impacted falling 17 per cent to 44,936 units against year-ago period’s 54,434. Bigger small car segment ranging from Rs 3.5 to 6 lakh including i10, Ritz and Figo saw 18 per cent decline at 53,719 units against 65,290 in the year-ago period. Swift and Dzire production loss in July 2011 accumulated to 17,000 units.

“We expect production to recover this month because of new model launches by automakers (such as new Swift),” said Vishnu Mathur, director general of Siam. The top three carmakers Maruti Suzuki, Hyundai Motor and Tata Motors saw sales falling 31 per cent, 11 per cent and 43 per cent respectively despite offers of discounts to the tune of Rs 30,000 to Rs 46,000.

Light truck models such as Tata’s Ace and Mahindra’s Maxximo helped bus and truck industry post robust growth despite increase in diesel fuel price. Sales of light trucks increased 36 per cent to 37,111 vehicles in July 2011 against 27,297 a year ago. Mathur pointed out that light trucks, meant to ferry goods, are increasingly being used in cities where heavy trucks are not permitted.

Two-wheeler sales rose 12 per cent at 1.05 million units against 938, 514 units sold in the year-ago period helped by huge demand for scooters such as Honda’s Activa and TVS Wego. Scooter sales increased 23 per cent at 205,695 units. Surprisingly car exports that remained relatively subdued earlier in the year rebounded to post 40 per cent growth at 48,091 units. Micra (11,195 units), Santro (5,190 units), Figo (3,050 units) and Accent (2,356) were main contributors.