India SUV Sales Drop in July
Sales of sport-utility vehicles in India fell in July for the first time in nearly two years, as a recent increase in factory tax affected demand in a segment that was the lone bright spot in the country's sluggish passenger-vehicle market.
India's automobile-industry association Tuesday forecast a second consecutive year of lower car sales, as a slowing economy crimps demand in what was seen until a few years ago as a growth market by global vehicle manufacturers.
Sales fell 17.5% from a year earlier in July to 37,010 vehicles, according to data issued Monday by the Society of Indian Automobile Manufacturers. That was the first drop in sales since a 0.2% drop in October 2011, and the biggest since May 2009 when sales fell 29%.
Continued weak demand has forced the Society of Indian Automobile Manufacturers to scale down its estimate of 3%-5% sales growth given in April for the year ending March 31, said Sugato Sen, its deputy director general.
"Such a fall can happen only because of a trigger and the trigger was [increase in] excise [factory] tax," said Vishnu Mathur, SIAM's director general.
He didn't say how much the sales could fall this year.
SUV makers such as Mahindra & Mahindra Ltd., 500520.BY-0.28% Tata Motors Ltd. 500570.BY 0.90% and Toyota Motor Corp. 7203.TO 1.29% increased prices in March after the Indian government raised the factory tax on locally produced SUVs by three percentage points to 30%.
Weak consumer sentiment because of the economic slowdown, worsened by rising fuel prices and higher borrowing cost, is taking a toll on sales in the world's sixth-largest car producing country.
Sales have been hit also by an increase in diesel prices in India where most SUVs run on diesel. Weak consumer sentiment in an economy growing at its slowest pace in a decade has also dented demand in the auto market.
India's economy grew 4.4% during April to June 2013, its weakest pace since the first quarter of 2009. Many economists expect this fiscal year's economic growth to be equal to or less than last year's decade-low pace of 5%. Prices of diesel and gasoline have climbed 10.2% each since January.
Mahindra—India's largest producer of SUVs—and car makers such as Maruti Suzuki India Ltd. 532500.BY-0.35% are temporarily shutting factories to adjust inventory levels in line with the sluggish market.
Car sales in India fell 6.7% in the year ended March 31, 2013, to 1.9 million units, the first decline in annual sales in a decade. Since December, year-over-year sales fell every month before recording an expansion in August.
In July, local sales of cars dropped for the ninth consecutive month. Sales fell 7.4% from a year earlier to 131,163 cars, according to the manufacturers' body.
In the past month, sales of cars rose 15% to 133,486 vehicles, the association said Tuesday.
Ten of India's 14 car manufacturers reported a drop in July car sales. They included Hyundai Motor CO., Toyota, Ford Motor Co., General Motors Co. and Volkswagen AG. Car-market leader Maruti, however, reported an increase in sales, mainly because of comparison with a lower base last year when it temporarily shut a factory due to labor problems.
That was mainly because of a more-than-twofold increase in sales at Maruti Suzuki India Ltd. from a year earlier when production was hit because of the closure of a factory. The Suzuki Motor Corp. unit, India's top car maker by sales, locked out workers at its plant at Manesar in the northern state of Haryana for several days in July 2012 and most of August after a labor problem
Auto makers have resorted to various programs to attract buyers, including introducing new models or upgrades of existing models. Several of them have cut prices of their cars and SUVs, while offering customized financing schemes.
During April to August, or the first five months of this fiscal year, car sales in India fell 5.8% to 699,300.
Mr. Mathur said some automobile as well as auto-parts makers are "adjusting" their temporary workforce due to the weak market. He declined to elaborate.
The higher sales in August were "merely an aberration," Mr. Sen said. "Even with the festive season, we won't be able to recover from this negative trend."
India's economic slowdown is also weighing on the market for trucks and buses.
Sales of cars, motorcycles and scooters tend to rise during the festival months when India's majority Hindus consider it auspicious to make new purchases. The South Indian festival of Onam is in September, followed by others, including the main festival of Diwali in November.
Sales of medium and heavy trucks and buses declined for the 17th straight month in July. Sales fell 20% in the past month to 18,611 vehicles. Sale of light trucks and buses, which are used for short-distance transportation, fell 12% to 36,690 vehicles.
In August, sales of sport-utility vehicles declined for the second straight month—they fell 12.6% from a year earlier to 39,379 vehicles. July's 17.5% drop in SUV sales was the first decline since October 2011.
Mr. Mathur said auto makers are hoping for a spurt in sales in the coming months because of this year's good monsoon rains and the forthcoming festival season.
In addition to the rising price of diesel—the fuel used by most SUVs in India—demand has been affected by an increase in the prices of SUVs. Mahindra & Mahindra Ltd., Toyota Motor Corp. and other SUV manufacturers increased prices in March after the government raised the factory tax on locally produced SUVs to 30% from 27%.
India has received better-than-average rainfall so far in the monsoon season that started in June, which could boost farm output. Farmers typically increase their purchase of consumer-durable goods and jewelry when they have bumper harvests.
Sales of medium and heavy trucks fell 44% in the past month to 11,855 vehicles. That was the biggest drop in the segment since a 61% drop in December 2008, Mr. Sen said.
Meanwhile, the south Indian festival of Onam will take place in September, followed by others, such as Diwali in November. India's majority Hindus consider it auspicious to purchase consumer-durable goods during festivals. 汽车配件网
The figure indicates a slowdown in infrastructure, mining and construction activity, he said.
Sale of light trucks and buses fell 14% to 35,866 vehicles./