Impact of high interest rates and petrol prices

Car sales in India grew at the slowest pace in seven months during May with industry body Society of Indian Automobile Manufacturers (SIAM), on Monday, reporting 2.78 per cent growth as high interest rates and petrol prices continue to hit the market.

According to figures released by SIAM, domestic car sales in May stood at 1.63 lakh units as against 1.59 lakh units in the same month last year.

“This is the slowest growth since October last when car sales witnessed a decline of 23.77 per cent,” SIAM Director-General Vishnu Mathur told reporters here.

“The softening of interest rates, which was expected to happen, has not materialised and continues to be high. Moreover, the high prices of petrol have also affected sales and the overall sentiment in the market is negative,” he added.

Increase in prices of vehicles following the excise duty hike in the budget had also had a major impact, Mr. Mathur said, adding that even diesel vehicles, which used to have a lot of demand, had tapered off.

“In the premium and executive segments, which are generally considered to be not price sensitive, the demand for diesel vehicles has slowed down,” Mr. Mathur said.

At such a time, he added, “If the government goes ahead and decides to tax diesel vehicles more, the overall demand will suffer all the more.''

In the passenger car segment, market leader Maruti Suzuki's sales dipped by 5.94 per cent to 72,309 units. However, rival Hyundai Motor India's sales increased by 3.03 per cent to 31,939 units. Tata Motors' car sales were up by 6.70 per cent at 17,371 units. In May, total sales of vehicles across categories registered an increase of 10.52 per cent at 15.13 lakh units as against 13.69 lakh units in the same month last year.

Total two-wheeler sales last month increased by 11.40 per cent to 11.93 lakh units from 10.71 lakh units in May 2011.

According to SIAM data, motorcycle sales grew by 7.24 per cent during the month to 8.88 lakh units from 8.28 lakh units in the same month last year.

In this segment, market leader Hero MotoCorp posted 10.68 per cent jump in sales to 5.03 lakh units in May.

However, rival Bajaj Auto's sales went down by 5.30 per cent to 2.07 lakh units during the month.

Honda Motorcycle & Scooter India (HMSI) posted a 45.45 per cent increase in sales to 88,334 units, while TVS Motor moved 47,175 units, 14.47 per cent less than the corresponding month of the previous year.

The scooter segment's overall sales grew by 34.40 per cent to 2.35 lakh units from 1.75 lakh units.

HMSI's scooter sales grew by 65.47 per cent to 1.24 lakh units during the month, while Hero MotoCorp sold 36,312 units, up 24 per cent. TVS Motor's sales saw decline of 2.42 per cent during the month to 34,936 units.

Commercial vehicles sales grew by 9.12 per cent to 62,025 units during May, from 56,841 units in the year-ago period, SIAM said.

Medium and heavy commercial vehicle sales declined by 10.58 per cent to 22,227 units during the month from 24,858 units in May last year.

According to SIAM, light commercial vehicle sales grew by 24.43 per cent to 39,798 units in May, 2012, from 31,983 units in May, 2011.

In the three-wheeler category, sales fell by 3.32 per cent to 37,184 units from 35,988 units in the same month last year.

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