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State of the car mart
posted by
Vivek Sharma
02 Sep 2008, 22:29
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labels: companies, automobiles
On the surface, car sales seem to be slowing down further. Maruti’s domestic car sales fell by 10 per cent in August, the steepest fall in 30 months. Tata Motors reported a 6 per cent fall in volumes, while M&M and GM saw very modest increase in volumes.
But, look deeper and the situation is not all that grim. The manufacturers which reported lacklustre sales growth are the ones with older models in the portfolio. Maruti’s weak links are the old models like Alto, Zen, Wagon R and the very old Maruti 800. Newer models like the Swift, Swift Dzire and SX4 continue to be in demand, especially the diesel versions. For Tata Motors sales of Indica slumped 32 per cent, but volumes of Indigo, Sumo and Safari went up.
Also, Hyundai’s excellent numbers prove that there are enough buyers out there for new, well marketed products. The Hyundai i10 has been a runaway success and the company’s August domestic sales jumped 34 per cent.
Can Maruti and Tata Motors storm back with new models? Tata Motors has already launched the new Indica Vista and the initial reviews and market response seems to be favourable. The company may also launch a new version of the Indigo before the end of this year. Then of course there is the Nano, though it is unclear how many Tata can produce if the Singur plant does not become operational. Maruti is readying to launch the A-Star in a few months, to be followed by the Splash which will replace the Wagon R.
Will demand hold up until the new models hit the market? If interest rates go up further, demand will obviously cool off in coming months. Most industry observers believe car sales will actually decline this financial year, though the fall may not be that big. More model launches, also from Fiat and Hyundai, opens the possibility that no manufacturer will see a substantial boost to sales from a single successful model – like Hyundai now.
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