Auto companies in India continue to face a shortfall in demand during the current financial year, as sales of passengers have reportedly dropped by 7-8 per cent in April 2013. This is after sales in the previous fiscal year went down by 6.7 per cent, a drop witnessed for the first time since the past 12 years. In addition, with an increase of excise duty on large vehicles, sales of Utility Vehicles (UVs) and more specifically, Sports Utility Vehicles (SUVs) have also been hit in the preceding month. At present, the only positive sign is that two-wheeler sales in the Indian market have risen by 1-2 per cent.
Several measures have been initiated by the Indian auto industry to modify production and inventories as per demand. Stocks available at various dealerships are being limited. Top UV manufacturer Mahindra & Mahindra reported a decline of 2-3 per cent in UV sales and it was only the demand for Quanto which showed signs of positive growth. UV sales at Maruti Suzuki declined by 5 per cent in April this year, thereby reporting sales of just 5,318 units. Similarly, Toyota Kirloskar showed a decline of 30-40 per cent in wholesale despatches of UVs, which included Toyota Fortuner and Innova. It is quite surprising to note that the UV segment, which posted a growth of 50 per cent in FY 2012-13, is now accelerating only in single digits. Clearly, it has been hit after the excise duty hike announced in Union Budget 2013.
Sales for top companies Hyundai Motor India, Tata Motors and Toyota Kirloskar fell by 7 per cent, 49 per cent and 37 per cent, respectively. Many senior industry executives have stated that had it not been for special festive occasions such as Navratri, Vishu, Ugadi, Bihu or Gudi Padwa in different parts of India, the decline during April would have been greater.
Commenting on the current scenario in the market, Pravin Shah, Chief Executive for the Automotive Division at Mahindra & Mahindra, said, “We are extremely disappointed that the additional 3% excise duty on SUVs has not been reversed in the Finance Bill. If it had been reversed, it would have brought some cheer and momentum for SUV makers and provided them with a level playing field.” He further added, “We remain cautiously optimistic of the current situation and do hope that with a likely cut in interest, the auto industry will look up.”
It is clear that growth amid the prevalent market condition is a huge challenge for most car makers, which makes the high sales of specific models such as Renault Duster, Maruti Suzuki DZire and now Honda's new Amaze all the more significant. Cautiously expressing optimism, Jnaneswar Sen, Senior Vice President, Marketing and Sales, Honda Cars India Limited, said, “Amaze has received tremendous response from customers despite the slowdown in the industry. We are confident that Amaze will drive our growth in this fiscal.”
Auto companies are hoping for some measures to be announced by the Union Government, to fuel an increase in sales. At present, several measures ranging from discounts, freebies, finance options and lowering inventory levels are being offered to domestic car buyers, in order to tide over the unfavourable conditions.
