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Car sales down 24% in October; sharpest decline in 10 years

This is the fourth consecutive decline in car sales on a year-on-year basis since July, mainly due to the severe impact of labour issues on Maruti’s production. It is also the steepest decline since December 2000 when car sales in the country dropped by 39.86%, as per SIAM data

New Delhi: Car sales in India registered their steepest monthly decline in over 10 years in October, tanking by 23.77% on account of a huge drop in output by the country’s largest car-maker Maruti Suzuki India (MSI) due to labour trouble, coupled with high interest rates and fuel prices, reports PTI.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM) today, domestic passenger car sales stood at 1,38,521 units in October, as against 1,81,704 units in the same month last year.

This is the fourth consecutive decline in car sales on a year-on-year basis since July, mainly due to the severe impact of labour issues on MSI’s production.

“This is the steepest decline since December 2000 when car sales in the country dropped by 39.86%," SIAM director general Vishnu Mathur told reporters here.

The industry was expecting positive sales growth in October due to the festive season, but it did not happen, he added.

“The reason for the fall is mainly due to the high interest rates and high fuel prices and also a big drop (in output) by Maruti Suzuki,” Mr Mathur said.

MSI has been facing labour problems at its Manesar plant since June this year, which resulted in either the complete or partial stoppage of production on three separate occasions.

In October, MSI’s sales declined by 55.11% to 41,192 units from 91,754 units in the same month last year.

Rival Hyundai Motor posted a 5.31% fall in sales to 32,811 units in October this year from 34,651 units in the same period last year.

Tata Motors also reported a marginal dip in sales to 20,948 units from 21,093 units in the same period last year.

Domestic passenger car sales had fallen in July for the first time after 30 months of continuous growth, registering a 15.76% decline to 1,33,747 units, mainly due to hikes in lending rates and lower production by MSI in that month.

Currently, interest rates on car loans are hovering around 12%-16%.

Mr Mathur said sales have mostly been affected in the smaller car segment due to the negative sentiment.

“There is still demand in the mid and bigger segments, especially for diesel cars. On one hand, we have long waiting periods for diesel cars and on the other, there is no demand for petrol cars, as the price difference between diesel and petrol fuels is around Rs30 per litre now,” Mr Mathur added.

Asked if the October sales will lead to a revision of the sales forecast for the fiscal, he replied in the negative and said: “We need to wait and watch for November and December, as Maruti is expected to gain numbers after the resolution of the strike.”

In October, SIAM had significantly lowered the passenger car sales growth forecast for 2011-12 to 2%-4% for the second time after pegging it at 10%-12% in July, as against 16%-18% announced at the beginning of the fiscal.

As per the figures released by SIAM, motorcycle sales grew marginally during in October to 8,79,883 units from 8,74,146 units in the corresponding month last year.

Market leader Hero MotoCorp’s sales fell marginally to 4,64,175 units in October this year from 4,64,271 units in the same period last year.

Bajaj Auto saw a 1.90% rise in sales to 2,44,503 units from 2,39,936 units in the same period last year, as per the latest SIAM data.

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