Car Sales Skid in July, Hit Two-year Low

Maruti worst hit with 26% decline in sales as costlier loans, high fuel prices hurt; auto cos pin hopes on festive season for a pick-up

 Car sales in India hit a two-year low in July as rising costs, costlier loans and higher fuel prices prompted customers to postpone purchases of new vehicles. 

Initial reports from automobile makers showed a 9% drop in sales of new passenger vehicles over July 2010 when 2.02 lakh cars and SUVs were sold. The Society of Indian Automobile Manufacturers compiles and releases the exact figures towards the middle of every month. Car sales, which are seen as a key barometer of the country's economic health, had jumped 30% in the fiscal year ended March. 
Maruti Suzuki, India's biggest automaker, led the decline reporting a record 26% fall in monthly sales to 66,504 units. The company said a halt in the production of its popular Swift hatchback in the run up to the launch of a new variant and a shift in the manufacturing facility of Swift Dzire sedan were largely responsible for the steep fall in sales. 
"We lost huge numbers as our best-selling car, the Swift, has been discontinued, and the Swift Dzire will now be manufactured only in Gurgaon," said Mayank Pareek, managing executive officer (marketing & sales) at Maruti Suzuki. "Due to re-organising the production arrangement, we managed to dispatch 2,500 (Swift and Dzire) against 22,000 last year." 
The company plans to launch a new version of Swift by mid-August and has already booked close to 40,000 units. "We are banking on the festive season and are expecting a 15% jump in sales in the coming months," Mr Pareek added. 
Hyundai Motor India, the country's largest car exporter and second-largest manufacturer, posted a 11% drop in sales to 25,642 units. The company had sold 28,811 cars in July 2010. "The July sales, for both the industry as well as Hyundai Motor India, had been negative," the company's director (marketing and sales) Arvind Saxena said. "Though customer enquiries have increased, but due to the increase in fuel price and interest rates, conversion rate has slowed down." Sales at Tata Motors were also negative with the company registering a 38% fall in passenger vehicles to 17,192 units. The company had sold 27,865 units in the same month last year. Nano minicar sales fell 6% to 3,260 units, while the Indica range reported 32% drop in sales to 5,860 units. Indigo recorded a 30% decline in sales to 4,877 units, while Sumo, Safari and Aria fell by 2% to 3,195 units in July this year. Maruti Suzuki, Hyundai Motor India and Tata Motors together account for 80% of passenger vehicle sales in the country. Analysts tracking the sector, however, are optimistic. They feel the festival season, beginning this month, is likely to revive demand and bring sales back on track. "There will be some revival in demand in August itself with festivals like Ganesh Chaturthi, Onam and Navratras in the next few weeks," a Mumbai-based analyst with a brokerage firm said. 
Companies such as General Motors and Toyota Kirloskar Motors, which have launched new models in recent months, managed to beat the industry trend. General Motors India registered a 34% sales growth on the back of the diesel variant of Beat car. The company sold 9,508 units in the month over 7,124 in July last year. Toyota reported a 99% jump in sales to 13,592 units.