Land Rover Freelander II SUVs on the assembly line in the Jaguar Land Rover plant at Pimpri in India's Maharashtra state. China has approved a joint venture which will see Jaguar Land Rover (JLR) make and sell luxury cars in China in partnership with domestic company Chery Automobile. (AFP)
AFP/New Delhi/Beijing
Sales of India’s once-booming passenger car segment shrank for a second year, hit by a sharp economic slowdown and high borrowing costs that kept customers away from showrooms, data showed on Friday.
Meanwhile, the China Association of Automobile Manufacturers (CAAM) said in a statement yesterday that growth in auto sales in China – the world’s biggest car market – slowed sharply in March as the economy weakens. In China, sales of all types of vehicles rose 6.6% year-on-year to 2.17mn units in the month, the CAAM said in a statement. Growth decelerated from a 17.8% surge in February.
The Society of Indian Automobile Manufacturers (SIAM) said it hoped for a “moderate improvement” this year with a new government due to take power after marathon elections in the country of 1.2bn that began this week.
Passenger car sales contracted by 4.59% in the last financial year to March 2014 over the previous year to 2.3mn units.
Total commercial vehicles such as trucks and goods carriers slid by 16%, mirroring economic growth at a decade-low of 5.0%.
“We’re hoping for moderate improvement this year,” said SIAM president Vikram Kirloskar, but gave no precise forecast except to say growth should be “more than zero per cent”.
“We hope it’s the end of our winter of discontent. This has been one of the most difficult years for the industry. We’ve had continuous decline over the last two years,” he told reporters.
The industry body had initially forecast passenger car sales growth of three-to-five per cent in 2013-14 but saw its hopes dashed. India’s passenger car market was in negative growth territory a decade ago.
New launches and discounts failed to woo customers in the face of weak consumer confidence, high interest rates due to stubborn inflation and rising fuel prices. Kirloskar said economic growth “is still not encouraging. We need more than seven-to-eight per cent growth to see good growth in auto sales”.
During India’s boom years, passenger car sales growth was in the double digits and foreign carmakers made a beeline for the country, hoping to offset saturated developed markets. Kirloskar added the tight consumer market has prevented manufacturers passing on rising commodity input costs.
Traditionally in April, Kirloskar noted, carmakers would be hiking prices.
But this year no vehicle manufacturer is raising its sticker price, reflecting the subdued market. “Carmakers are facing a tight squeeze,” he told AFP.
The SIAM president said he hoped the nine-phase polls due to wind up May 12 elects a government that will unlock the “structural bottlenecks and get infrastructure projects going”.
“That’s the key to getting growth to pick up,” he said, but expressed no preference for any party.
The Hindu nationalist Bharatiya Janata Party, perceived as more business-friendly than the left-leaning ruling Congress, is tipped to win the elections.
Longer-term, the car industry is upbeat on prospects due to still low ownership levels and the country’s rapidly increasing middle class.
In China, sales of passenger vehicles alone expanded 7.9% on-year to 1.71mn units in March, the CAAM said, citing strong demand for sport utility vehicles and multi-purpose vehicles.
But Chinese brands recorded only a 39.3% market share for March in the passenger car segment, it said.
