Car sales remain in low gear; hopes pinned on October news
02 July 2011

Car sales, which have been close to stagnating in the last couple of months, saw another distinct slowdown in growth in June, thanks to hardening interest rates, spiralling fuel prices, and rising input costs driving away buyers from showrooms.

After two years of exceptional growth, car sales in June are expected to have grown just 3-4 per cent.

Market leader Maruti Suzuki reported its first drop in sales in more than 30 months. Maruti, which saw an almost two-week workers' strike which crippled production at its Manesar plant in Haryana near Delhi last month (See: Maruti strike completes 12th day), said domestic sales fell by 4 per cent to 70,020 units against 72,812 units in June 2010. Production was further affected by a six-day maintenance shutdown at its other plant in nearby Gurgaon, while a similar exercise is on at Manesar since 27 June.

Honda, Ford India, Tata Motors, and Fiat India were the other losers in the month.

Honda has been battered by competition, while also suffering production setbacks due to supply constraints from Japan in the wake of the 11 March earthquake-tsunami disaster there. Its volumes fell 25 per cent to 3,455 units.

On the other hand, Volkswagen and Hyundai emerged net gainers. Hyundai stayed positive as its new Verna sedan has picked up volumes. The company's domestic volumes in June were up 11 per cent at 30,402 units, though it did admit of pressures. "The market remained slow, but Hyundai sales have grown partially due to the new Verna," Hyndai India sales and marketing director Arvind Saxena said.

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Car sales remain in low gear; hopes pinned on October