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Strike, interest rates dampen automobile sales
Production losses at industry leader Maruti Suzuki and a slump in
sales because of high interest rates and rising fuel prices have
resulted in a grim sales picture for the auto industry in October.
Crippled by a fortnight-long strike at its manufacturing facility
in Manesar in Haryana, Indian
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Kolkata: Automobile
makers are keeping their fingers crossed on the revival of India's
passenger car industry after a dip in sales for the fourth
consecutive month till October on the back of high fuel prices and
interest rates. Some manufacturers, however, expect the market to
show some signs of recovery from next March-April.
Car sales in India, the world's second fastest growing automobile
market after China, were down by 23.8 percent in October. It was
the biggest monthly percentage decline since December 2000.
The Society of Indian Automobile Manufacturers (SIAM) has cut its
sales growth forecast for the current financial year to 2-4
percent from its earlier projection of 16-18 percent due to
soaring interest rates and continuous rise in petrol and commodity
prices.
Maruti Suzuki India Ltd. (MSIL), the country's largest car maker,
said the trend of fall in sales was likely to continue if the
macro-economic conditions remained unchanged.
"Passenger car sales are substantially down obviously due to high
fuel price and rising interest rates. The trend is likely to
continue if the macro-economic conditions of the country do not
change," MSIL chief general manager (marketing) Shashank
Srivastava told IANS on the phone from Gurgaon.
The company, which earlier slashed its sales growth target from 13
to eight percent for this fiscal due to inflation and other
issues, now says even this is unlikely in the current economic
scenario.
"That (8 percent sales growth) target looks unlikely...it will be
less than that," Srivastava said.
He also said the recent petrol price cut by the country's oil
retailers by Rs.1.85 per litre, the first cut since January 2009,
will not have any impact on the weak demand.
The state-run oil marketing companies raised the prices of petrol,
the fifth increase this year, by Rs.1.85 per litre earlier this
month before slashing the prices.
Global automotive major General Motors expects that the country's
gloomy car market, which has been experiencing sluggish demand
from January 2011, may show signs of revival from March 2012.
"The market will remain dull till February next year. It may
revive after the budget session (of parliament), depending on the
budget proposals," said General Motors India vice president P.
Balendran.
He said that now about 80 percent of the car demand was for the
diesel versions after the consecutive petrol price hikes by the
oil marketing companies.
General Motors India reported a marginal increase in its sales in
October this year at 10,062 units compared to 10,051 in the same
period an year ago.
Balendran said the company was able to jack up sales, despite the
dull market, due to high demand for its hatchback Beat diesel.
Asked whether high demand for diesel cars would continue if the
government de-controlled diesel prices, he said: "As long as the
gap between the prices of petrol and diesel remains, the high
demand for diesel cars will continue."
Diesel is currently sold below its economic cost with a subsidy
given by the central government.
"Automobile companies in India are facing a tight situation
because of high fuel cost and rising interest rates," an official
of Toyota Kirloskar Motor Pvt. Ltd. told IANS, requesting
anonymity.
The country's central bank has raised its key lending rates 13
times since March 2010 to tame the stubborn inflation.
He said demand for cars will increase when the overall economy
picks up.
"For boosting weak domestic consumption, first there should be
some investments in the country...at the end of the day consumers
buy cars," he added.
Renault, a French automobile manufacturer, said the dull Indian
car market might somewhat revive after April if the interest rates
stabilised.
"I hope the government will do something to stabilise the rates.
Because then only the customers will return to the market," said
Len Curran, Renault India vice president, sales and marketing.
Asked whether the recent cut in petrol prices by oil retailers
will push up automobile demand, Curran answered in the negative.
"It will not have any impact."
(Mithun Dasgupta can be contacted at mithun.d@ians.in)
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