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Weak car sales in February deepen industry's woes

Car market leader Maruti Suzuki announced grim sales even as the company's Chairman R.C. Bhargava aired a negative outlook for 2016 ruing the high tax burden.

twitter-logo Chanchal Pal Chauhan        Last Updated: March 1, 2016  | 20:04 IST

A day after the government imposed fresh taxes on the automotive sector, the industry came out with sluggish sales data for the month of February even as the fresh levies are likely to plunge the industry into a deeper negative zone in 2016.

Car market leader Maruti Suzuki announced grim sales even as the company's Chairman R.C. Bhargava aired a negative outlook for 2016 ruing the high tax burden. "The fresh taxes on new cars comes at a time when the industry was coming out of the downward cycle," he said as the company posted a meagre 0.2 per cent increase to 108,115 units sold last month.

During the month, the reservation agitation in Haryana had disrupted its production leading to a cumulative 0.9 per cent decline in sales to 117,451. Exports dispatched dipped by a higher 12.4 per cent to 9,336 vehicles last month, the company said in a statement.

Car prices were hiked in the range of Rs 3,000 and going up to Rs 5 lakh for luxury models and sports cars, after the government imposed an infrastructure cess and taxes on different class of vehicles. Indian automotive industry had grown 2.35 per cent till January of this fiscal

Small cars of less than 4 metres including- Petrol-LPG & CNG would be charged 1 per cent cess, while similar diesel cars are at a harsher 2.5 per cent (engines less than 1,500 cc) bracket. And for rest of the segment; meaning anything which doesn't come under the 'small' category, it will be taxed at 4 per cent from Tuesday.

Popular cars like Hyundai EON turned expensive by Rs 3,000 from Tuesday onwards, while Honda City sedan costing around Rs 9 lakh will see an increment hike of up to Rs 36,000. Meanwhile, all cars carrying Rs 10 lakh price tag would have to pay an additional 1 per cent tax, which would go beyond the 4 per cent levied on the bigger cars and SUVs.

The real impact of the budget hike would be felt from March onwards when price hikes becomes effective and most of the models become pricier.

South Korean carmaker, Hyundai Motor India and second largest passenger carmaker posted a 9 per cent hike in sales to 40,716 units sold in February 2016 on the back of strong demand for its compact SUV Creta.

Commenting on the February sales, Rakesh Srivastava, Senior Vice President for Sales and Marketing at Hyundai Motor said, "Hyundai domestic sales grew by 9.1 per cent on the strength of strong performance of the three 'Indian Car Of The Year' brands Creta, Elite i20 and Grand in spite of logistic challenges for transportation of vehicles to North India and loss of many business days of dealership operations across Haryana."

Utility vehicle major, Mahindra and Mahindra posted strong sales on the back of newly launched compact KUV100 and TUV300 models. Its passenger vehicle sales (includes UVs, Cars and Vans) grew 26 per cent to 23,718 units in February 2016 over 18,817 units sold during February 2015. "The imposition of an infrastructure cess would increase prices, which is a cause of concern and a faster roadmap for GST would bring some relief to the industry," Mahindra's President & Chief Executive (Automotive) Pravin Shah said.

Tata Motors passenger car sales declined 20 per cent in February 2016. It sold 10,962 units last month compared to 13,767 units last year in February. The passenger car wholesales numbers were lower by 21 per cent in February at 9,284 units over 11,805 vehicles in February 2015 and the utility vehicles sales declined by 14 per cent to 1,678 units last month.

Japanese carmaker, Honda Cars India (HCIL), posted a 23 per cent decline last month. It sold 13,020 units in February 2016, against 16,902 units in the corresponding month last year on declining demand for its top sellers like City and Amaze sedan. Its multi-utility vehicle Mobilio consistently failed to attract customers and only 226 units were sold last month.

Indo-Japanese venture Toyota Kirloskar Motors posted a 13 per cent decline in sales to 10,312 units sold in the domestic market this year from 11, 802 units of February 2015. N. Raja Director Sales & Marketing at Toyota Kirloskar Motor said that the ban on registration of diesel vehicles in Delhi & NCR affected sales. "Delhi & NCR market constitutes 8-10 per cent of our market share, which comprises both the Innova and Fortuner. Moreover, the unrest in Haryana has further impacted our business in that region with dealerships being closed for more than a week," he said.

French carmaker Renault India, on a smaller base of last year posted three-fold increase in sales to 8,834 units in February 2016 as against 3,419 units sold in the corresponding month last year. Its performance was largely due to strong demand for its newly launched KWID hatchback that the company claimed has crossed the 100,000 mark.

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