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Car Sales Slow Down To 3.4% In April
Car sales during the month of April was not as exciting as in the previous month. Triggered by the possibility of increased car prices following the union budget, many car buyers advanced purchases to March resulting in a record month in terms of sales.
April car sales clearly show customers are now wary of buying cars following the increase in excise duty on cars. The high fuel prices have also not helped boost car sales. The Society of Indian Automobile Manufacturers in its report has stated that the increased excise duty had slowed down car sales in April to just 3.4%.
Another shocking revelation from the SIAM is about the slowdown in sales of the entry level small cars. This segment registered a mere 0.9% increase in sales mainly due to the fact that none of them come with a diesel engine. Maruti Suzuki's Alto, the country's best seller did not have a good month with sales going down from the previous month and a whopping 49% decline when compared to April 2011.
The decline in the entry level car sales in April is a clear sign that many first time car buyers have abstained from buying cars du to increased prices. Although banks have announced a 0.5% cut in interest rates on car loans, this does not seem to have had the desired effect on car sales in April. We can expect some improvement in car sales in May if all banks reduce car loan rates.
While the small car segment is struggling t grow at previous levels, the larger utility vehicle segment appears to be going stronger by the day. This segment posted an impressive 47.3% increase in sales thanks mainly due to Maruti Suzuki's Ertiga which garnered more than 10,000 sales.
Carmakers are expecting a tough period of lower sales in the coming months. They do not expect sales to pick up until the onset of the festive season which will start only from October. The festive season was expected to provide the much needed boost the car industry last year too but carmakers could only garner a slight increase in sales.
Industry insiders are blaming the market sentiment, increased prices and the high excise duty for the slow car sales in April. They now expect the same trend to continue for the first six months of this financial year.
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