Auto sector misses festival cheer

Maruti Suzuki's sales slipped more than half, down 52% to 51,458 units, compared with 1,07,555 cars sold last October. The company, which also posted its worst quarterly results on Saturday, with a 60% slide in profit for the July-September period, attributed the decline to the recurring workers' unrest that led to an output loss of more than 40,000 cars.

"The labour unrest at Manesar plant during October adversely impacted both production and sales of cars in the Indian market," a statement from Maruti said. Production loss impacted the company's exports, which fell 64% to 4,137 units in the month. Hyundai posted a 5% decline in its domestic sales to 33,001 units, while exports declined by a sharper 12% to 15,325 units. Cumulative demand during October was down 7.5%.

Car sales fell to the lowest level this year in October, with the festive month providing little cheer to the sector hobbled by costlier car loan, high fuel costs and labour unrest at market leader Maruti Suzuki. The traditional step-up in demand seen during festive season was clearly missing as the second biggest carmaker, Hyundai Motor India, also reported a decline in sales, compared to the same period last year.

"Traditionally, sales get a boost in the festival season, but this year the sentiment has been tepid," Hyundai's director (marketing & sales) Arvind Saxena said, "We don't expect any major upswing in the near future as the challenging economic environment is affecting the industry."

Tata Motors, however, reported a marginal growth of 3% in passenger vehicles sales, due to rise in demand for its small cars Nano and Indica even as bookings declined for bigger cars from the Indigo range. Japanese carmaker Toyota Kirloskar Motor, which entered the mass car market last year, posted a 63% growth to 10,762 units, on the back of sales of Etios and Etios Liva models. "Even as the production was low in October due to festive holidays, we have registered a strong growth in sales due to strong demand for our Etios range of cars that is expected to drive growth for us in the coming months," said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar Motor. Amrinder Gill Yaariyan

Utility vehicle maker Mahindra & Mahindra also posted a 10% rise in sales to 18,756 units, driven by robust demand from the rural markets. The two-wheeler segment continued to fare better than cars, with market leader Hero MotoCorp (erstwhile Hero Honda) sales up 1.32% to 5.12 lakh bikes and scooters in October. Honda Motorcycle and Yamaha posted a 20% increase in sales during the festive season, compared to the same period last year.

Analysts said car sales, which hit the reverse gear in July, are unlikely to pick up speed anytime soon. "The central bank's consistent surge to control inflation by increasing interest rates regularly has hit the consumer sentiments which may carry to the early part of 2012 on the back of weaker global markets," said Deepesh Rathore, managing director of IHS Automotive India. Reserve Bank of India has raised interest rates 13 times since mid-March 2010 to contain inflation.

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