Continuous dip in sales of car companies have forced their umbrella organisation SIAM to seek stimulus package from the Government.
Car sales fell consecutively for the straight eighth month in a row as it dipped 9 per cent with sales standing at 1,39,632 units in June compared to 1,53,450 units in the same month last year.
“We are in a helpless situation now as slow economic growth, high interest rates, fuel prices and high inflation are all affecting consumer sentiments. Government needs to have a re-look and bring a stimulus package for the auto industry, which will help in achieving higher growth,” said SIAM President S Sandilya.
“It was a sort of double whammy for the automobile sector as the Government withdrew the stimulus package and the economy started slowing in. So, the automobile sector could not get the time to stabilise and right now except commodity prices nothing is helpful for the sector,” added Sandilya.
Explaining more on the stimulus SIAM Director General Vishnu Mathur said: “ We are looking at the a stimulus package similar to the one given during the 2008-09 downturn, in which excise duty on two-wheelers, small cars and commercial vehicles were reduced to 8 per cent.”
When asked whether they have reached the Government on the stimulus package, Mathur replied in the negative and said: “We hope our voice gets heard and they (Government) provide some stimulus. Auto sector is the driver of the economy and stimulus package can kickstart the economy.”
In June market leader Maruti Suzuki India posted 8.17 per cent decline in domestic sales at 65,172 units as against 70,977 units in the corresponding month last year while Hyundai Motor India ltd posted a marginal increase in car sales to 30,577 units from 30,363 units in June last year.
Tata Motors had a decline of 29.17 per cent to 9,628 units from 13,595 units in the same month last year while Mahindra & Mahindra posted 17.17 per cent decline in its utility vehicle sales at 15,916 units from 19,348 units in June last year.
“Utility vehicle sales have been affected by hike in excise duty to 30 per cent from 27 per cent announced in this year’s Budget and high cost of ownership,” added Mathur.
On the forecast, Sandilya said in the April-June period this fiscal, domestic car sales declined by 10.41 per cent as against 3-5 per cent increase forecast in April. Similarly, two-wheeler sales also dipped by 0.82 per cent against a forecast of 6-8 per cent, commercial vehicles were down by 8.12 per cent against a projected growth of 7-9 per cent.
“In such a volatile scenario, we thought it doesn’t make a sense to give a revised forecast now,” he said, adding it was unlikely that the growth projection made in April would be met in almost all the segments this fiscal, except two-wheelers.According to the SIAM data, motorcycle sales in last monthdeclined by 9.16 per cent to 7,99,139 units from 8,79,721 units in the same month previous year.
“looking forward, we anticipate FY14 to be one of the toughest years for the industry, with PV sales likely to decline by 2 to 5 per cent on a YOY basis. Offering a ray of hope, UV sales are expected to grow by 7-8 per cent during the year on the back of new models like Ford EcoSport and others expected to launch later this year,” said Rakesh Batra, Partner & National leader - Automotive practice Ernst & Young.
“The increase in diesel prices is likely to hamper sales of diesel vehicles and their share is likely to decline to below 50 per cent this year from 58 per cent in FY13,” added Batra.
Market leader Hero MotoCorp registered 10.14 per cent decline at 4,39,845 units, while rival Bajaj Auto saw its sales dip by 24.5 per cent to 1,59,688 units in June.
Honda Motorcycle & Scooter India (HMSI) saw its bike sales grow by 19.28 per cent to 1,13,700 units in June this year.
SIAM said scooter sales in June grew by 15.16 per cent to 2,58,224 units as against 2,24,224 units in the year-ago month.
HMSI registered 5.17 per cent increase in its scooter sales go 1,27,154 units, while Hero MotoCorp had 61.93 per cent increase in scooter sales to 52,312 units in June this year. Chennai-based TVS Motor Co posted 1.92 per cent decline in scooter sales to 36,969 units during the same month.
Total two-wheeler sales in June 2013 declined by 4.56 per cent to 11,16,424 units from 11,69,741 units in the same period of previous year, SIAM said.
“With 50 per cent of the two-wheeler sales coming from rural areas, we hope that the monsoon, which is average or above average so far, will have a positive impact on sales,” Mathur said.
Three-wheeler sales in June this year declined by 8.71 per cent to 38,414 units as against 42,081 units in the same month last year. Total sales of commercial vehicles declined by 13.45 per cent to 56,197 units from 64,928 units in the year-ago period, SIAM said.
“The commercial vehicles segment is the most depressing scenario. This is the 15th successive month of decline in the segment as there is overall slowdown in economy and freight movement has been affected,” Mathur said.
Total sales of vehicles across categories registered a decline of 5.10 per cent to 14,07,767 units in June 2013 as against 14,83,443 units in the same month of 2012, it added.