June car sales rise; SIAM lowers FY13 forecast

NEW DELHI Tue Jul 10, 2012 7:04pm IST

1 of 2. A man stands beside a car inside a parking space in New Delhi August 10, 2009.

Credit: Reuters/Fayaz Kabli/Files

Related Topics

Stocks

   
A statue of the Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

NEW DELHI (Reuters) - The Society of Indian Automobile Manufacturers (SIAM) on Tuesday slightly lowered its car sales growth forecast for the year ending next March, as higher costs and slower economic expansion impinge on demand.

But SIAM hoped demand would revive later in the year.

Car sales for the current fiscal year are expected to rise 9-11 percent, the group said, lower than the 10-12 percent growth it had forecast in April.

Car makers are struggling to achieve double-digit sales growth targeted by the industry as Asia's third-largest economy grows at its slowest pace in nine years, hurting a sector that has been one of the best performers over the past decade.

The budget raised factory gate duty on cars from April 1, pushing up prices, although it did not impose a feared tax on diesel vehicles. Sales of diesel cars have soared in recent months, thanks to government subsidies that make the fuel around 50 percent cheaper than petrol.

Many local carmakers, including Maruti Suzuki(MRTI.NS), Tata Motors (TAMO.NS) and Toyota Motor's (7203.T) Indian unit have temporarily reduced production in the last few weeks as the slowdown began to bite.

In June, companies sold 155,763 cars, an annual growth of 8.3 percent, but the lowest sales volume since October last year. For the quarter ended June, sales were up just 5.2 percent, far lower than the new annual forecast range.

Industry executives defended the new sales forecast.

"Fuel prices have come down moderately, interest rates are not going up, the government is under tremendous pressure to come up with reforms, we think it is kind of reasonable," SIAM President S. Sandilya told reporters.

Vishnu Mathur, director-general of the industry body, said he expected demand to revive during the festive season that begins in September and peaks in November after Diwali.

The industry body lowered its sales forecast for trucks and buses, expecting it to rise 6-8 percent over the current fiscal year, lower than the 9-11 percent it had predicted in April. It maintained its sales growth forecast of 11-13 percent for two-wheelers.

Breakneck domestic car sales growth over the past few years has attracted the who's who of the world's biggest car makers, including Ford Motor Co (F.N) and Volkswagen AG to spend billions of dollars setting up factories in the country.

But demand for cars fell for the first time in three years last July and slumped by the most in over a decade in October as high interest rates and rising fuel costs deterred buyers, typically reliant on loans for purchases.

Leading automobile stocks were trading positive. Top carmaker Maruti Suzuki was up 1.2 percent, Mahindra & Mahindra was up 0.6 percent, while Tata Motors gained 2.4 percent in a broader market that was up 0.6 percent.

(Reporting by Anurag Kotoky; Writing by Devidutta Tripathy; Editing by Ron Popeski)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Pharma Sector

Pharma Sector

In race for bigger margins, drug makers willing to lose the India "advantage".  Full Article 

Markets This Month

Markets This Month

Tata Motors, M&M top Sensex gainers  Full Article 

Jan Dhan Yojna

Jan Dhan Yojna

Modi: Banking for all to end "financial untouchability".  Full Article 

Tracking Monsoon

Tracking Monsoon

Monsoon forecast to be better for crops next week  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage