While the local units of Suzuki Motor Corp. Hyundai Motor Co. and posted marginal gains in passenger vehicle sales in May, Tata Motors Ltd. posted a decline in sales as high inflation, rising loan rates and price increases hurt demand.
Growth in vehicle sales has been hit as several companies raised prices in January and April to offset higher raw material costs. A series of interest rate increases by the central bank to control rising inflation also prompted potential customers to defer purchases. The Reserve Bank of India raised its lending rate by 2.5 percentage points in nine moves since March 2010.
Automobile sales in India grew at a record 27% in the financial year ended March 31 to 15.51 million units but the industry expects the pace this year to be around 12%-15% due to the higher sales base.
Maruti Suzuki India Ltd. posted a 1.9% rise in car sales in May to 104,073 vehicles. That is the lowest percentage gain since a 1.1% rise in July 2008.
Local sales at India’s largest car maker by sales grew 4% to 93,519 vehicles but exports fell 13% to 10,554 vehicles.
May sales for Maruti grew at half the pace of April and followed a 28% rise in March, signalling a moderation in demand for new cars and sport-utility vehicles due to the higher sales base of last year.
“Sales are broadly driven by interest rates and fuel prices. These factors have now turned negative,” Mayank Pareek, managing executive officer for marketing and sales at Maruti told Dow Jones Newswires. “We have seen a decline in small car sales. This segment is the most price sensitive and customers for such vehicles are first to delay purchases.”
Mr. Pareek said almost 70% of cars are bought on Car loan in India.
Maruti said sales of its small cars declined 3% to 61,048 units in May. It sells eight small cars including the Alto, Alto K10, Swift, Ritz and M800.
“Small cars drive sales and a lack of new models in the segment is one of the factors impacting demand,” Jatin Chawla, analyst with Mumbai-based brokerage India Infoline Ltd. said. “New launches boost demand and most of them have been sedans in the past few months.”
Tata Motors said sales of its cars and SUVs in India fell 9% to 19,401 autos in May. It sold 6,515 units of the Nano minicar locally, up 84% from a year earlier.
Total vehicle sales, including trucks and buses, at Tata Motors rose 10% in May to 62,296 autos. Local sales of trucks and buses surged 19% to 37,361 vehicles.
Tata Motors also exported 5,534 vehicles in May, posting a 39% growth.
Sales at Mahindra, India’s biggest utility vehicle maker by sales, rose 20% to 34,323 vehicles. Local sales grew 19% to 32,159, partly helped by a higher demand for its upgraded Verito sedan. Exports more than doubled to 2,164 units, it said.
The company sold 16,702 units of its utility vehicles Bolero, Scorpio and Xylo and sedan Verito, up 20% from a year earlier. Dispatches of the Verito–previously sold as the Logan–nearly tripled to 1,291 units.
Hyundai Motor India Ltd. said sales rose 2% to 47,766 vehicles in May, helped mainly by sedan Fluidic Verna introduced in May. Local sales grew 15% to 31,123 autos but exports fell 15% to 16,643 units. The company received 12,000 bookings for the Verna in May.
General Motors India said sales rose marginally to 8,329 vehicles from 8,225 a year earlier.
Toyota Kirloskar Motor Pvt. posted a 24% rise in May sales to 7,470, helped by demand for its Etios sedan that hit 3,412 units. Volkswagen Passenger Vehicles India Pvt. sales trebled to 6,185 autos.
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