Government’s proposal to cut excise duty posed no significant impact on small car sales. Price cuts on small cars due to excise duty reduction failed to impress the small car market segment. Maruti recorded a drop of 0.2% after recording 24 months of growth. Hyundai and General Motors added new volume cars to their portfolio and recorded considerable growth in their market share. However, Tata Motors also recorded drop in their sales in March 2008 as compared to the same month in the last fiscal year.
Maruti controls the largest market share in India and it has recorded drop in sales in February 2006. Surprisingly, it recorded slow dispatches in March 2008 despite the excise duty reduction and price cuts. The drop in sales of Maruti models was only marginal from 64,421 units against 64,556 units. Alto, Wagon R, Zen and Swift are attributed to the drag even when all the models are volume labels. The company also recorded drop in export sales in March 2008.
However, the company officials commented that it “decided to keep inventory levels low” as dealers had achieved their targets. Thus, March numbers should not really be read too seriously.
On the other hand, Tata Motors also witnessed drop in sales of passenger vehicles up to 4%. The company officials said that they had sold 25,760 units last year in March 2007 as compared to 24,737 units in March 2008.
