Car sales crash in May, job losses likely

Car sales in India fell for a record seventh consecutive month in May with a decline of

12.26 per cent, prompting industry body SIAM to caution that the prolonged slump in the market could result in job losses in the automobile sector.

According to the latest data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales in May stood at 1,43,216 units as against 1,63,222 units in the same month of 2012.

"This is the longest stretch of consecutive decline in car sales we have witnessed. Even in the 2008-09 downturn there were no such prolonged period of fall. These are worrying times for the automobile industry," SIAM Director General Vishnu Mathur said.

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Overall economic slowdown, high inflation and interest rates, low consumer sentiments and insecurity over jobs are affecting demand for cars, he added.

When asked if the continued slump in the industry could result in job losses, Mathur replied in the affirmative.

"So far we have not received any specific information of people being laid off but the situation is such that it may have started or will start soon," he said.

The first to be affected will be the contract and temporary workers, mostly in component suppliers. Even the original equipment manufacturers may follow suit if the demand

for cars continued to be low, he added.

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The previous record for the longest consecutive decline in car sales since SIAM started collating data in 1997-1998 was set in April this year when sales fell by 10.43 per cent to 1,50,789 units.

During May, market leader Maruti Suzuki India registered 8.25 per cent decline in domestic sales at 66,342 units.

Rival Hyundai Motor India posted a marginal increase of 0.35 per cent at 32,052 units, while Tata Motors saw its sales dip by 48.60 per cent to 8,927 units.

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Honda Cars India, however, posted 9.31 per cent increase in sales at 11,274 units in May on the back of its newly launched compact sedan Amaze.

What is worrying SIAM is that except for the utility vehicles and scooters, all the segments have posted decline in sales in May.

"For the overall passenger vehicles it was the sixth consecutive month of decline in sales, while for total heavy commercial vehicles it was the 15th month of decline on a

stretch," Mathur said, adding it was also the fourth consecutive month of decline in motorcycle sales.

 
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According to SIAM, in May, motorcycle sales declined by 0.72 per cent to 8,81,288 units from 8,87,646 units in year-ago month.

Market leader Hero MotoCorp posted a decline of 2.11 per cent in its sales at 4,92,044 units.

Rival Bajaj Auto, however saw its bike sales grow  by 2.6 per cent at 2,12,129 units, while that of Honda Motorcycle and Scooter India (HMSI) was down by 2.79 per cent to 85,866 units during the month.

Scooter sales were, however, in the positive territory in May, growing by 13.06 per cent at 2,65,892 units as against 2,35,185 units in the same month last year, SIAM said.

HMSI saw its scooter sales grow by 8.56 per cent at 1,34,750 during the month. While Hero MotoCorp posted 52.97 per cent jump in scooter sales at 55,549 units, Chennai-based TVS Motor Co saw its sales dip by 6.11 per cent at 32,801 units.

According to SIAM, the total two-wheeler sales in May 2013 rose by 1.13 per cent to 12,06,173 units from 11,92,700 units in the same period of previous year.

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During the month, three wheeler sales declined by 3.46 per cent at 35,841 units.

Total sales of commercial vehicles declined by 10.6 per cent to 55,458 units from 62,032 units in the year-ago period, SIAM said.

Total sales of vehicles across categories registered a decline of 0.93 per cent to 14,98,909 units in May 2013 as against 15,12,986 units in the same month of 2012, it added.

Mathur said while in the 2008-09 downturn, the government had intervened to support the auto industry but this time it has not been forthcoming.

When asked when the automobile industry could see a turnaround, he said: "It will happen only when the economy grows again, a fall in interest rates alone will not be enough now. The overall sentiment is very low. Hopefully a good monsoon will bring some cheers, at least in the two-wheeler and small car segment."

The new model launches from companies may bring some excitement in the market, he added.