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Car sales in India in slow motion while customers show more demand for two wheelers

Recurrent escalation in prices of petrol has finally got to the citizens of India. The last major fuel price hike has caused tempers to fly and anger being vented on the current government who has turned a blind eye to the common man. This drastic increase in fuel prices has had an immediate and adverse effect on sales of four wheelers in the country. Auto companies are showing dismal sales while two wheeler companies are surging ahead in the race.

Maruti Suzuki India Limited, one of the country’s largest auto manufacturers have seen a 4% drop in sales. The company sold only 89,478 units in the month of May even though they launched two new vehicles – Ertiga and Dzire. Sales of the more tried and tested models of Alto, WagonR and Estilo too did not do too well during the month which saw a dip to the extent of 29% in May sales.

Hyundai Motors the second largest auto manufacturer in India too saw dismal sales in May which increased by only 3% to 32,010 units during the month and sales of Tata Motors too rose only 6% to 20,503 units.

With these conditions in the market which is already being plagued by higher interest rates, new set of taxes being levied in the Union Budget and a sagging economy the future does not seem bright. The depreciating Rupee too is contributing to increased costs of spares and components which are making it mandatory for auto companies to increase prices of their vehicles.

Conversely sales of two wheelers are strong specially in rural areas. Hero MotoCorp saw an increase of 11.3% to 5.56 lakh vehicles in the month of May 2012 while Honda Motorcycles figures too jumped by 52% to 2.21 lakh units.


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