Small car production falls 10%, Siam cuts sales target

With sales slowing down month on month, it is no wonder that production of small cars fell 10.2% in June, the first time this year.
Total production of cars less than 4.5 metre in length and with engine displacement of up to 1.6 litre stood at 11,654 units last month as against 12,981 units sold in June 2010.

While some of this decline was because of a 10-day production loss at Maruti Suzuki India (due to workers’ strike at one plant), much of it may be self induced by car companies which are already wary of rising inventory costs as dealer stocks pile up.

Domestic sales of these cars remained largely flat during the month, with only 236 additional units sold (12,552 units in all) compared to the year-ago period. Even export performance raised concerns at a mere 134 units (564 units) in June.

As per data released by the Society of Indian Automobile Manufacturers (Siam), not a single unit of either the Honda Jazz or Mitusbishi Lancer was produced in June. Maruti Suzuki India and Tata Motors held the dubious distinction of reporting lower production across each of their passenger car models - nine for Maruti and four for Tata.

For the first time this year, Tata Nano saw production falling by 379 units to close the month at 5,640 units. As many as five of the 11 compact car (between 3.6 and 4 metres long) producing companies reported production declines last month.

Domestic sales remained largely flat in June. Only the Nano and the regular cars (less than 3.6 metre long) registered any growth since almost all compacts and most mid-sized sedans showed a declining trend. GM Spark, Hyundai Santro, Skoda Fabia and Volkswagen Polo registered good sales growth. Mahindra Verito and Hyundai Verna sedans were also trudging up the growth path.

The decline has become steeper in June and this is evident from the numbers: during the three months ending June, domestic sales growth remained healthy at 38,174 units (36,951 units) even though exports suffered to settle at 378 units (840 units).
Even production growth during the three-month period has been healthy at 40,765 units (34,717 units).

But when it comes to larger, premium cars, the scenario is better. Sales of the premium segment cars such as BMW 5 Series, Mercedes E Class, Hyundai Sonata and Volkswagen Passat were up to 1,195 units in June (980 units). Luxury cars also prospered, with sales settling at 91 units (81 units).

Overall, sales rose 1.6% to 143,370 cars last month, compared with 141,086 a year earlier, the slowest growth since March 2009.
Overall production was up to 187,388 units (169,445 units). Almost all production increase has accrued from large cars.
Siam has reduced the growth target for car sales in the country to as much as 12% for this fiscal from the earlier aim of 18%, Pawan Goenka, president of the group, said.