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Cars sales hit roadblock

August 20, 2008

A day after the society of Indian Automobile Manufacturers (SIAM) released monthly sales and production figures, the country’s largest car maker, Maruti-Suzuki (MSIL), issued a release pointing out that some data was wrong. But despite that, there has been a perceptible drop in automobile sales, pointing to the fact that the increase in car loan rates have begun to pinch.

From rack rates of about 13 per cent last year, the average auto loan is now available at 16-17 per cent. However, car makers have tried to work around this issue by launching more “basic” models and offering more incentives to car buyers.

The figures released by SIAM, which will be revised soon, showed car sales in July 2008 slowing to 87,824 units against 89,250 in July 2007, a drop of about 1.6 per cent. Even if the revised figures from MSIL result in this figure being revised upwards, that will not change the fact that the biggest drop occurred in the Executive segment, in which the company has no presence.

However, market dynamics are also playing a role here. Toyota is launching Corolla’s replacement, the Altis, on September 5 and is ramping down the current model. This has also eaten into sales of Corolla’s biggest rival and market leader Honda Civic, which declined to 548 units during the first quarter from 1,385 units.

Kushan Mitra

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