Awful August sale renders car companies to slash production

August has been a really atrocious month for the sales of passenger cars in India. Now become a cliché, rising prices and high interest rates are joined by two more stings namely inflation and unpredictable stock market which has bit the demand for passenger vehicles, chiefly cars in India. The production of passenger cars has plunged badly in August like never before. Two and a half years back, a reduction was seen in February 2009 (-2 %) amid the global economic recession. Cars, Utility cars and vans-all components of passenger cars are facing a sluggish demand and the production of this segment has gone down to 2,34,093 units from a good 2,46,146 units in August 2010 registering a degradation of 5%. While passenger vehicle production was up 27% last fiscal, the growth rate started descending right from the onset of this fiscal.

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The growth pace of car sales went down to 22.5% in April, 18% in May, 12% in June and 2% in July before going touching a minus figure in August. Society of Indian Automobile Manufacturers (Siam) has already reported its spectacle comments by saying that demand is likely to remain moderate for passenger cars this year and it may have to revise the sales outlook from already revised 16-18% to a minimal 10%-12 %. A slowdown is evident from the sales figure on festivals like ‘Ganesh chaturthi' and 'Onam'. Every year, these festivals are marked by cluttered car showroom, maximum car searches and a backlogged bookings for passenger cars. But sales did not picked up momentum this year.

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Among the ones who have slashed their production are Maruti India which has registered a sale of -22% owing to labour unrest at Manesar plant, Tata Motors recording a down sale of -27%, Honda Siel marking its sales at -32%, Fiat Motors disclosing a negative sale of 54% and Hindustan Motors enlisting sales at -54%. Such dismal figures are obvious to give car companies a headache although many analysts feel this is a temporary phenomenon.

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