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Domestic passenger vehicle sales in India must increase

The demand for passenger Vehicles in the country leaves much to be desired. All major auto companies are citing falling sales where this segment is concerned and the primary reasons for the same are constraints in the economy, higher fuel prices and escalating interest rates. This situation has been way below par since the past financial year and is not likely to see major improvements in the fiscal 2013-14 either. At present the two single most successful new cars in terms of sales are the Maruti Alto 800 small car, and Renault Duster SUV.

The Alto 800 mini hatchbback is selling in huge numbers with 1 lakh units sold in 124 days of launch. 6,313 units of Renault Duster SUV were sold in March 2013, making it a bestseller. Another highly anticipated launch is the Honda Amaze sedan diesel for India  While launch is scheduled for 11th April, and bookings are open since the start of the month, the much awaited diesel vehicle has already raked in numbers with 2,552 Honda Amaze sedans being sold in march 2013. The timely boost did ensure that Honda India was able to curb their sales decline to single digits for the month instead of a whopping 32%. Tata Motors on the one hand has actually endured 67% passenger cars sales decline for the month. In fact Maruti too has reported contraction in their sales volume. While Honda Amaze could keep the company in the positive, it is left to be seen how it contributes to the health of the Indian auto industry. Another much anticipated launch is the Ford EcoSport urban utility vehicle that is expected to be sold in June this year. Ford too has reported 41.6% sales decline for the month, having been following the pattern these past 7 months.

Growth in the passenger vehicle segment is expected to be at around 2% during the 2012-13 fiscal. Small car segments grew at a slower rate. There is a significant drop in enquiries both in the Indian urban and rural sectors which signal slower growth up ahead in financial year 2013-14. Sales in the passenger vehicle segment is low and profitability metrics are facing an additional brunt due to increase in new launches, wage hikes of employees and restricted pricing and discounts being offered to boost sales.

The utility vehicle segment has seen the most growth in the past few years. In fact, this segment has grown 26% in the past three years and higher growths are predicted for the coming fiscal as well. As against this growth, the passenger vehicle segment has grown to the extent of just 2.2% in 2011-12 and at -4.6% in 2012-13. Again, in this segment, it was diesel car volumes that saw an increase over petrol vehicles in the past two years following dieselization of the passenger vehicle industry.


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