Weak monsoon rains could hurt auto sales - industry body

NEW DELHI Tue Jun 10, 2014 6:22pm IST

Heavy traffic moves along a busy road during a power-cut at the traffic light junctions in New Delhi July 31, 2012. REUTERS/B Mathur/Files

Heavy traffic moves along a busy road during a power-cut at the traffic light junctions in New Delhi July 31, 2012.

Credit: Reuters/B Mathur/Files

Stocks

   

NEW DELHI (Reuters) - Weak monsoon rains could have a negative impact on India's automobile sector which is seeing early signs of improvement with the sale of passenger cars and utility vehicles rising in May, an industry body said.

"A bad monsoon would certainly mean some negative impact," Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (SIAM) told reporters on Tuesday.

Mathur said sales of two-wheelers and small cars, which depend significantly on demand from rural areas, would be impacted most if the monsoon is deficient.

India still relies on monsoon rains to irrigate more than half of its farmland and if rainfall comes in below average, as forecast by the country's weather officials on Monday, it would result in lower incomes for rural households.

Car sales in India are likely to rise marginally this fiscal year after two consecutive years of decline as buyers were put off by high inflation and interest rates and slow growth in Asia's third-biggest economy.

"Definitely the sentiment has improved. People have started buying cars again. We hope this is a sustainable thing ... this continues for a few months," said Mathur.

In May, sale of passenger vehicles, which includes cars and utility vehicles, rose 2.76 percent from a year ago on improving consumer sentiment after pro-business leader Narendra Modi came to power with a mandate to revive economic growth.

Car sales rose 3.08 percent in the same period while the sale of trucks and buses, widely regarded as a barometer of the economy, declined by 15.28 percent.

The rise in passenger vehicle sales has come after more than 15 months of decline, excluding August 2013 which was an anomaly, Mathur said, as sales of top carmaker Maruti Suzuki India Ltd surged on a lower base.

(Editing by Anupama Dwivedi)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Gireesh234 wrote:
Read the headline first. Tried my best to understand how monsoons can affect the automobile sales. Finally relented, only to understand that rural people form a major chunk of automobile sales.

Jun 10, 2014 8:28pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-WTO Row

REUTERS SHOWCASE

Market Eye

Market Eye

Nifty falls most in nearly 3-1/2 weeks; Sensex down over 400 points  Full Article 

Factory Activity

Factory Activity

Factories post fastest growth for 17 months in July  Full Article 

Paying for Bail

Paying for Bail

Jailed Subrata Roy gets office to negotiate hotel sales.  Full Article 

Rupee Dips

Rupee Dips

Rupee posts biggest weekly loss since record lows in August.  Full Article 

Reviving Infosys

Reviving Infosys

CEO Sikka says to improve business with new growth avenues  Full Article 

Outlook Slashed

Outlook Slashed

ArcelorMittal cuts outlook as ore prices hit mining  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China, Asian factory growth gathers pace; Europe falters  Full Article 

Factory Lockout

Factory Lockout

Pfizer says threats to managers force staff lockout at Mumbai factory .  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Reuters India Mobile

Reuters India Mobile

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