Car sales slump in October
Car sales in India fell 23.8% in October, the biggest monthly percentage decline since December 2000, as rising interest rates and fuel costs, coupled with the fallout of the prolonged strike at Maruti Suzuki drove down sales for a fourth consecutive month. The two-wheeler segment also stalled, posting a marginal monthly sales increase of just 2% to 11.5 lakh units. Hero MotoCorp and Bajaj Auto, the two biggest manufacturers of two-wheelers experienced flat sales, growing 1.2% and 1.9% respectively. Truck and bus sales held up, rising 19% to 61,800 vehicles, helped by robust demand for vehicles from Tata Motors and Ashok Leyland. SIAM has cut its sales growth forecast for the current financial year to 2-4% from an initial forecast of 16-18%. The automobile market relies heavily on demand from the middle class . The Reserve Bank of India increased interest rates by 25 basis points last month, making it more expensive to take loans to buy cars. Automobile companies sold 1,38,521 cars last month against 1,81,704 cars in 2010, according to SIAM’s data. Car manufacturers had hoped to boost sales in October the peak month of the festive season. Sales fell 1.8% in September, 10.1% in August and 15.8% in July. The strike at Maruti Suzuki during the festival season also proved to be a major impediment. The company’s profits declined by as much as 60% for the quarter ended September. The company had posted a 55% drop in production to 50,487 cars last month, pulling down the growth rate for the entire industry. Automobile analysts expect industry fortunes to revive in the coming months.