April car sales lowest since 2009 as car prices go up

According to the Society of Indian Automobile Manufacturers (SIAM) India’s domestic car sales rose 13% reaching a figure of 1.62 lakh in April, the least percentile growth since 2009.

The 13% increase in sales would have been a phenomenal figure for most countries but India is the world’s second-fastest growing car market the number is anything but positive.

SIAM’s report also mentioned that all manufacturers combined sold 162,825 cars in April which is an increase of 18963 units as compared to last year sales in the same month.

In April last year a total 143,862 units were sold by all car manufacturers together. This increase of 18963 units means that sales growth has been the lowest since June 2009.

SIAM also claimed that sales growth would come down from last year’s 29.7% to a meagre 14-16% this time around.

“Consumer confidence is low as economic conditions are shaky at the moment with the steady rise in the interest rate on auto loans affecting domestic demand,” Sugato Sen , Senior Director, SIAM said.

Maruti Suzuki, Hyundai, Toyota and GM (Chevrolet) had all announced price hikes in or around the March-April period. Customers had to bear the brunt of these hikes and hence a lot of prospective buyers were discouraged.

The hike in car prices due to rising input costs along with inflation and lack of financial stability in the country has resulted in a slump in car sales.

Further the tsunami in Japan affected the supply of spares and production of several Japan based auto manufacturers. Honda was among the worst hit and has been facing production constraints since the tsunami in March. The company’s sales sank by almost 43 percent in April as compared to last year.

Other car manufacturers too suffered losses due to various constraints; Ford’s sales went down by 1.7% and General Motors faced a reduction of 1.1%.

Although Tata Motors had something to be happy about as after an initially disappointing sales run they managed to sell more than 10,000 Nano cars in April 2011. Also read: Tata Nano sales go up in April

The cumulative sales of the Nano stood at 70,432 vehicles during the March 2010 – March 2011 period which is a 132% sales increase when compared to the 30,350 sold in the March 2009 – March 2010 period. This trickles down to a grand total of 1, 10,782 units of the Nano in India.

However when compared with sales in April 2010, the sales of Tata’s India and Indigo models were down by 53% and 27% respectively.