Car sales in May grow at weakest pace in 7-months; overall auto sales up 10.26%

Growth in sales of passenger cars in India hit seven month low levels in May as higher borrowing costs and fuel prices dissuaded buyers from owning new four wheelers. With no aggressive softening of interest rates by RBI, higher running cost and recent price hikes owing to the excise duty hike in Budget, it has increasingly become difficult for car manufacturers to keep up the sales momentum as demand has been adversely impacted.

The body also underscored that sales of even diesel vehicles, which used to have a lot of demand has tapered off, sending signals to the government that its recent plans to tax diesel vehicles more would further deteriorate sentiments and the overall demand will suffer all the more. According to the latest data released by industry body Society of Indian Automobile Manufacturers (SIAM), domestic car sales in May stood at 1,63,229 units as compared to 1,58,809 units in the same month last year, posting a growth of 3.10 percent, the slowest growth since October last year when car sales witnessed a decline of 23.77 percent.

Sales of broader passenger vehicles segment expanded at 8.42 percent during April-May 2012 over same period last year while that of Vans sub-segment registered a de-growth of 5.31 percent during April-May 2012 as compared to same period last year. The only sub-segment that boasted of strong growth rate in the passenger vehicles segment was Utility Vehicles, which expanded by a whopping 51.05 percent thanks to some stylish and aggressively priced new launches.

Overall domestic production of automobiles across categories in May 2012 was 1,783,384 vehicles as against 1,613,872 in May 2011, indicating an increase of 8.15 percent year on year. While, total domestic sales of vehicles across categories expanded by 10.26 percent to 15,13,032 units in May as against 13,69,070 units in the same month last year.

The SIAM data also showed that total domestic two-wheeler sales in the previous month grew by 11.40 percent to 11,92,688 units from 10,70,603 units in May 2011. Of the total two wheeler sales, motorcycle sales stood at 8,87,634 units growing only 7.24 percent from 8,27,746 units in the same month last year. However, the scooter overall sales showed strong growth of 34.40 percent to 2,35,185 units from 1,74,985 units.

Moreover, commercial vehicles sales expanded by 9.12 percent to 62,025 units during the month, as compared to 56,841 units in the same month a year-ago. Of the total commercial vehicles sales, sales of the Medium and Heavy Commercial Vehicles dropped sharply by 10.58 percent to 22,227 units during the month compared to 24,858 units in May last year while light commercial vehicle sales continued to expand at strong rate of 24.43 percent to 39,798 units in May 2012 from 31,983 units in May 2011. In the three-wheeler category, sales fell by 3.32 percent to 37,184 units from 35,988 units in the same month last year.