Millennium Post

Car firms’ domestic sales skid 10.15% in worst dip in a year

Car sales in India dipped by 10.15 per cent in April, the biggest monthly decline in a year, as negative sentiments due to gloomy macro-economic conditions continued to plague demand despite a cut in excise duties on automobiles. According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales in April stood at 135,433 units in April as compared to 150,737 units in the year-ago month.

‘This is the biggest decline since May 2013, when car sales dropped by 11.7 per cent,’ Society of Indian Automobile Manufacturers Deputy Director General Sugato Sen said. Explaining the reasons for the continued sales dip despite reduction in excise duty in the Budget, he said: ‘What is happening is that we are unable to recover from the negative sentiment. We need a trigger to change the sentiment.’

In the interim Budget for this fiscal, Finance Minister P Chidambaram cut excise duty to 8 per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles; 24 per cent from 30 per cent for SUVs; 20 per cent for mid-sized cars from 24 per cent and 24 per cent for large cars from 27 per cent.

Sen said the change would be possible only after a new government comes to power and announces measures to kick start the economic growth during the full Budget.

‘The current rate of 4-5 per cent growth is not enough. For a healthy growth of the automotive sector, we need the economy to grow at over 7 per cent,’ Sen said, adding the forecast of a deficient monsoon is also a concern. Factors like high interest rates, fuel prices and inflation are still affecting demand.

When asked why the reduction in excise duties hasn't resulted in demand surge, he said: ‘Today, even after the cut, the cost of ownership is extremely high. The small car customers are the most vulnerable under the current circumstances.’

Sen, however, said the only positive was that footfalls at dealerships have increased although those have not been
converted into sales.
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