Interest Rates and Fuel Rates Hikes slow down Cars sales
According to the Society of Indian Automobile Manufacturers, domestic car sales went down to 1,38,521 units in the month under review from 1,81,704 units sold in the like period of last year.
“The rate rise have deterred consumers who have already availed of home loan to increase their outgo in EMIs by investing in a new car,” said Arvind Saxena, director (marketing) of Hyundai Motor India.
On Oct 25, the Reserve Bank of India (RBI) in its attempt to tame high inflation, which has hovered close to double digits, raised the repurchase rate, or the interest it levies on short-term borrowing by commercial banks, by 25 basis points to 8.5 %.
The rate hike was the 13th straight increase since January 2010. Ever since growth started slipping, India Inc has been clamouring for a stop to the monetary tightening.
The increase in repo rate made auto, housing and commercial car loans dearer. The auto-sector was especially hit as 70 % cars in the country are financed.
“This (sales) is the steepest decline since December 2000, when domestic sales dropped by 39.86 per cent,” SIAM director general Vishnu Mathur said.
Meanwhile, two-wheeler sales grew by two % during last month at 1,147,621 units from 1,125,052 units sold in the corresponding period of 2010.
But positive news came from the commercial vehicles segment, whose sales soared by 18.53 % at 61,800 units from 52,138 units in the like period of last year.
However, total vehicles sales across all categories declined marginally by 1.05 % at 14,41,594 units last month from 14,56,901 units in October 2010.
Company-wise, Maruti Suzuki reported a 53.2 % fall in October sales, mainly due to the crippling effect of a fortnight-long strike at its manufacturing facility in Manesar in Haryana.
Total sales stood at 55,595 units, a 53.2 % drop from the 118,908 vehicles sold in October 2010.
Its exports too fell by a whopping 63.6 % in the month under review to 4,137 units compared to 11,353 vehicles in the like month of previous year.
Chennai-based Hyundai Motor India too reported a sales fall, which declined by 7.5 % at 48,325 units sold, compared to 52,217 units in the like period of last year.
Tata Motors’s sales, including exports for October, increased by 5 % at 68,009 units, compared to the 64,756 units in the like period last year.
“Company’s domestic sales of Tata commercial and passenger vehicles for October were 63,838 (units), higher by nine % over 58,806 (units) in October last year,” the auto major said.
Despite the good performance in domestic segment, the company’s exports in the period under review declined by 30 % at 4,171 units from 5,950 units sold in October 2010.
Sales of the entry-level compact car Nano grew by 26 % last month at 3,868 over October last year.
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