Reports – Car sales in India experience the lowest growth in nine years

Posted on Jan 16 2013 - 9:42am by Kaustubh Shinde
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SIAM’s (Society of Indian Automobile Manufacturers) latest reports confirm that Indian car sales are likely to post their weakest growth in nine years this financial year.

Instrument panel of a car illuminated at night

As per the industry data, the total output for the period of April-December 2012 stood at 1,697,625 vehicles as opposed to 1,677,588 in April-December 2011. A growth of just 1.19 percent isn’t impressive at all.

SIAM claims that three factors played a major role in the slowdown –

  • Slumping GDP growth
  • Rising fuel costs (both petrol and diesel)
  • Rising interest rates

Owing to the dwindling sales, SIAM will cut its car sales growth forecast for 2012-13 by 0-1 per cent. This is a third revision for this financial year from the initial estimate of 10-12 per cent. A segment wise analysis of growth rates gives us a better picture –

  • Passenger Cars declined by 0.33 percent
  • Utility Vehicles grew by 59.10 percent
  • Vans grew by 3.71 percent
  • Medium & Heavy Commercial Vehicles (M&HCVs) registered decline of 19.13 percent
  • Light Commercial Vehicles grew at 15.61 percent
  • Three Wheeler sales grew by 4.96 percent
  • Passenger Carriers grew by 8.96 percent
  • Goods Carriers registered a decline of 10.29 percent
  • Scooters, mopeds and motorcycles grew by 18.44 percent, 1.80 percent and 0.77 percent

The growth story started in 2004 when established manufacturers like Maruti Suzuki, Tata Motors and Hyundai started posting incredible sales figures. The growth rates were touching an average of 30% and new boys such as Ford, Nissan and General Motors starting investing billions of dollars in expanding their Indian operations.

But last year the sales growth fell to just 2.2 per cent and this year, by the looks of things, the trend is supposed to continue.

This really begs the question – Will 2013 show an improvement over 2012?

[Source: articles.economictimes.indiatimes.com]

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6 Comments so far. Feel free to join this conversation.

  1. Shrinidhi Hande January 16, 2013 at - Reply

    No mention of electric vehicles..

    • Kaustubh Shinde January 16, 2013 at - Reply

      They haven’t really ‘arrived’ in India per say. I am sure that it will be a growing segment once it gets the required attention from manufacturers and consumers

  2. S Pani January 16, 2013 at - Reply

    Well, the two sided attack on car sales of fuel prices and loan interest reates have definitely taken a toll.

    Hopefully, with some of the uncertainty over fuel prices dissipating, this should ease up a bit. But more than that once the RBI lets up a bit on its inflation control measures, car loan rates should go down a bit encouraging car sales again.

    But I think we cant really hope for 15-20% annual rises any more. Anything around the 5-10% mark will be good.

  3. sri January 16, 2013 at - Reply

    One cant buy a car every year !! if the market rise or growth in sales is observed in a particular year say 2010-2011 then the next check should be after 5 years means the existing customer would replace their cars along with the new (1st time) buyers.. so that year would register an increase How can these manufacturers expect people to keep on buy a car just to make their growth year on year ?? I dont like reading these statistics , anyways its their work to have records still useless..

    • Shrawan Raja January 16, 2013 at - Reply

      Hi Sri, the thing is India’s car penetration levels are very low, we have less than 17 cars for every 1,000 people. This is forecast to increase multi-fold if the interest rate and fuel prices don’t fluctuate and rise regularly. Perhaps in the Indian cities, cars are everywhere, but Tier 2 or Tier 3 cities have very minimal car penetration levels.

  4. sandy January 16, 2013 at - Reply

    UV growth by 59.10% is towering over other segments. And this could be due to SUV!? Now the Government will set its foot loose from repairing broken roads since people were driving SUVs and put extra tax on diesel; living us kicking ourselves.

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