Text size:

  • Small
  • Normal
  • Large

India car sales shrink for first time in decade

India's once red-hot car market shrank for the first time in a decade in the last financial year, underlining the scale of the slowdown in Asia's third-biggest economy.

India's once red-hot car market shrank for the first time in a decade in the last financial year, industry figures showed Wednesday, underlining the scale of the slowdown in Asia's third-biggest economy.

Passenger car sales fell by 6.7 per cent in the financial year to March 2013 to 1.89 million units compared with from 2.03 million the previous year, the Society of Indian Automobile Manufacturers (Siam) said in a statement.

Sales in March alone plunged 22.5 per cent year-on-year, raising questions about huge investment programmes announced by foreign car companies, such as Ford, which are building new manufacturing capacity.

"The basic problem has been the big downturn in the economy and high interest rates. They have knocked sales," Sugato Sen, Siam's deputy director general, said.

Asia's third-largest economy is estimated to have grown by a mere five per cent in the financial year to March 2013, its slowest pace for a decade attributed to low consumer spending and a slump in business investment.

Many blame the left-leaning government led by the Congress party which has presided over a period of high inflation and a string of corruption scandals which have knocked confidence since its reelection in 2009.

The last time annual car sales shrank was in 2002-03, Siam said.

The performance was a far cry from Siam's forecast at the beginning of the last financial year of 10-12 per cent annual growth for 2012-2013.

"These figures have disappointed all our earlier forecasts there has been a reversal in buying behaviour," Mr Sen said.

The gloom represents a turnaround from the scorching growth in most of the years up to 2010-11 when sales expanded 20 to 30 per cent annually, prompting foreign automakers to shift into the nation to offset weakness in developed markets.

Indian car buyers now are being bombarded with "buy now, pay later" offers as sellers battle to boost consumer demand. Other offers to lure buyers back into showrooms include interest-free repayments and discounts of up to 20 per cent.

To reduce inventories, automakers have been shutting production lines, while investment is already slowing, according to industry figures.

Out of the individual companies, passenger sales of India's top carmaker, Japanese-controlled Suzuki Maruti, rose 4.4 per cent to 1.05 million units the last financial year.

French carmaker Renault, which re-entered India's market just two years back, was a rare bright spot selling 52,463 units, a rise of 1,331 per cent helped by its popular $14,300 Duster SUV.

Siam president S Sandilya said the auto body expected car sales to pick up in 2013-2014, growing by 3 to 5 per cent year on year.

"Last year was a bad year, no doubt about that, but we do hope that things will get better with some government initiatives which have been announced to boost growth," Mr Sandilya said.

"Ultimately, with this country's population size (of 1.2 billion people), incomes growing, the low penetration of vehicles in this country the future is very bright for the industry that is a given fact," he said.

Siam says that the number of cars per 1,000 people in India is just 12.

* AFP

Back to the top

More articles


Editor's Picks

 Would you like it in blue? An Afghan shopkeeper shows a burqa to a customer at a bazaar in Herat. (Aref Karimi / AFP /  April 13, 2014)

In pictures: Best business images for the week to April 24, 2014

Here are some of the best business images for the week to April 24, 2014.

 That's asking a lot: this four-bedroom duplex penthouse apartment  at Marina Residence in Dubai is for sale with an asking price of Dh15.7 million. (Courtesy Better Homes / April 2014)

In pictures: Palm Jumeirah penthouse listed for Dh15.7 million

A four-bedroom duplex penthouse in Marina Residence 3 on Dubai's Palm Jumeirah is on the market for Dh15.7 million.

 Room with a view from one of the 21 duplex penthouses located in the Gate Towers sky-bridge. The sports courts and swimming pools can be seen below. Courtesy Alda

In pictures: Aldar’s Gate Towers Penthouse Collection on Reem Island

Aldar launched its Gate Towers Penthouse Collection at Cityscape Abu Dhabi. The launch features 21 penthouses spanning the skybridge, with each having a private indoor pool and incredible views.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National