Car sales skid for the third month in a row

Car dispatches in the country fell 1.8% in September, marking the third consecutive month of decline.

Domestic dispatches of cars stood lower at 165,925 units (168,959 units) as production fell 9.39% to 191,327 units, data released by the Society of Indian Automobile Manufacturers (Siam) showed.

The passenger vehicles (cars, utility vehicles and vans) category remained almost flat at 218,170 units (215,085 units) — the 1.43% growth seen in PVs in September, incidentally, was the lowest in 11 quarters.

For the July-September quarter, the PV segment reported a 4% decline in dispatches against a 33% growth recorded in the same period last fiscal.

The weak performance forced Siam to cut its 2011-12 growth forecast for cars to 2-4% from the 16-18% made in the beginning of the year.

Siam president S Sandilya cited rising vehicle finance rates and prices of petrol, additional tax on diesel vehicles in Delhi and the overall slowdown in the economy among the concerns.

While it was difficult to say if the decline in dispatches for cars translated into actual decline in retail sales, Sandilya felt the recurring labour issues at Maruti Suzuki had pulled down overall car numbers last quarter.

For the record, Maruti sells every second car in the domestic market.

Rising interest rates were a major dampener, too, said Sandilya. In the 15 months between April 2010 and July 2011, car loan rates rose at least 3.5 percentage points to 15.5%; commercial vehicle loan rates too saw a similar increase to 19.3%.

Though some softening has been seen in commodity prices — of steel, aluminium, copper and lead — overall demand remains a matter of concern, the Siam chief said.

But, two-wheelers continued to report robust growth at over 24% and commercial vehicle dispatches also held up (18% rise), largely on galloping demand for light commercial vehicles.

During September, two-wheeler production rose about 27%, while domestic sales were up 24.27% at 12,33,283 units.

Between July and September, two-wheeler sales grew 18% versus 24% in the same quarter last year.

Robust rural demand for both, varimatic scooters and bikes, has been fuelling overall growth in two-wheeler sales.

In commercial vehicles, LCVs raised the segment’s performance and were the only category of vehicles where Siam raised the projection for this fiscal. LCV sales surged almost 35% to 39,630 units (29,443 units) even as sales of passenger and M&HCVs fell by over 16%. Overall M&HCV growth in the domestic market last fiscal was a negligible 2% at 31,004 units (30,393 units).

On the exports front, all vehicle segments showed good growth with PVs growing 30%, CVs 33%, three-wheelers 48% and two-wheelers 13%. Overall exports rose almost 45% to 175,217 units with local companies exporting vehicles to markets such as Africa and Latin America.