Impacted by higher borrowing costs and increase in fuel prices, domestic car sales in July continued the slide that began earlier this year.
The big three carmakers — Maruti Suzuki, Tata Motors and Hyundai — which represent 75 per cent of the market saw sales taking a nosedive.
Market leader Maruti Suzuki saw a record drop in sales of 26 per cent, as it stopped production of its third most popular product – Swift. Combined with the shift in production of the Swift Dzire from its Manesar to Gurgaon plant, the company took a hit of 17,000 units.
A new model of the Swift, which posts average sales of 12,000 units a month, is being launched this month. The carmaker, which sells almost every second car in the country, saw a 4 per cent sales drop last month.
“The market was anyway down on the back of a poor business sentiment. Also, the base effect came into play as last year this period had been very good. At that time, Alto K10 and Eeco sales had been strong,” Mr Shashank Srivastava, Maruti Suzuki's Chief General Manager (Marketing), told Business Line .
Vehicle purchases have become more expensive with most banks raising interest rates after the RBI in July increased the key repo and reverse repo rates by 50 basisi points. The move, which was to rein in rising inflation, was the RBI's 11{+t}{+h} increase in 15 months.
“We expect a turnaround in sales by August-end or September. Usually, sales pick up in the festival season which starts with Onam in Kerala. Once we have normal production levels for the Swift, our numbers will improve,” Mr Srivastava said.
Hyundai, the second largest carmaker, also saw an 11 per cent drop in domestic sales, even as its exports saw 11 per cent rise. The Korean carmaker is the biggest car exporter out of India. “Though the customer enquiries have increased but due to the increase in fuel price and interest rates, conversion rate has slowed down,” said Mr Arvind Saxena, Director - Marketing and Sales, Hyundai Motor India.
Tata Motors' sales saw the sharpest fall among the larger players at 38 per cent. Sales of the Nano, touted as the cheapest car in the country, dropped 64 per cent to 3,260 units. Mahindra & Mahindra bucked the trend with 35 per cent higher car and utility vehicle sales.
Ford, which announced its second production facility in the country at Gujarat a few days ago, saw sales climbing 11 per cent.
The US-based carmaker is now working to increase capacity of diesel engines, which are high in demand for its popular model – the Figo compact. Meanwhile, Volkswagen more than doubled its July sales at 6,529 units, while sister company Skoda also saw a two-fold increase at 2,412 units. Toyota Kirloskar also saw sales doubling to 13,592 units
Two wheelers
Two-wheeler makers bucked the negative sales trend of the larger carmakers, with Hero MotoCorp (erstwhile Hero Honda) posting a 15 per cent growth in sales despite its Haridwar plant being closed for a few days.
HMSI saw sales rise 10 per cent on the back of a 20 per cent growth in scooter sales (91,642 units). TVS Motor and Yamaha saw sales go up by 14 and 28.5 per cent (38,197 units), respectively.