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Indian Auto Sales Dropped to Eight Years? Lowest Level
Jan 12, 2009

As the auto sales plunged significantly in November 2008, the situation for the Indian auto industry has worsened, putting more challenges for auto dealers and manufacturers.

Indian Automobile Manufacturers (SIAM) revealed that the Indian auto sales slipped further in November 2008, confirming the fear of auto manufacturers of a massive slowdown, reported The Economic Times.

As compared to 1.03 Lakh Units sold in November 2007, the sales of popular cars came 19.38% down to 83,059 Units in November 2008. The total vehicle sales during November 2008 were recorded at 7.11 Lakh Units, witnessing a decline of 18% from 8.67 Lakh Units in the corresponding month last year.

The sales performance of all kinds of vehicles added to the decline but commercial vehicles took the lead with fall of 49.52% to 20,637 in November 2008 from 40.879 Units in the same month a year ago. Sales of two-wheelers dropped by 14.68% to 5.67 Lakh Units from 6.65 Lakh Units. Motorcycles sales too dipped to 4.31 Lakh Units, a fall of 20.24% from 5.40 Lakh Units. Motorcycle sales represented 76% of the overall two-wheeler sales in November 2008 against 81% last year.

The primary factor responsible for decline in the Indian car sales is the reduction in demand on account of high interest rates and the lack of credit in the finance market. As people could not borrow money from the market to finance their vehicle, the purchases have plunged dramatically. Moreover, many consumers deliberately withhold big-ticket purchases in the wake of economic slowdown that paralyzed every business in the country.

In addition, spiraling petrol prices during November 2008 further worsened the situation by decreasing the auto sales.

The Indian automobile industry is heavily depending on the stimulus package given by the government to come back on track. Moreover, excise duty on all kinds of vehicle was slashed by 4% after which many big car companies have reduced their prices with expectation of seeing an upward trend in demand.

According to a Research Analyst at RNCOS, “Flow of liquidity in the credit market and lower interest rates are essential to bring the auto industry sales back to earlier growth rate. The proposed duty cuts may help the industry to bring some relief from the economic slowdown and push sales in future.”

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