Industry body cuts growth forecast for passenger vehicles sales for ongoing and next fiscal due to infra cess of up to 4% announced in the Budget
New Delhi : Car sales declined for a second straight month, posting 4.21 per cent dip in February, as Jat quota stir, inventory adjustment by some firms and postponed purchases in expectations of a price cut after the Budget affected demand.
According to the data released by the Society of Indian Automobile Manufacturers (Siam), domestic passenger car sales stood at 1,64,469 units in February as against 1,71,703 units in the same month last year. “Jat agitation had an impact on the industry, especially on market leader Maruti Suzuki’s dispatches. Moreover, there were inventory corrections by some of the auto manufacturers,” SIAM Deputy Director General Sugato Sen told PTI here.
He further said: “Also, some of the dealers didn’t pick up stock ahead of the Budget as they were expecting some reduction in excise duties that would have affected prices differently.”
Although in the Budget, instead of reducing excise duties on passenger vehicles, an infrastructure cess of 1-4 per cent was imposed on different categories of automobiles, besides collection of tax at source at the rate of 1 per cent on purchase of luxury cars exceeding Rs 10 lakh.
“Although we had forecast initially in the beginning of this fiscal that we expect growth of PVs to be 6-8 per cent, we have increased it to around 10 per cent when sales picked up during the year. Now due to the infrastructure cess we are revising it back to 6-8 per cent,” Sugato Sen said.
Car sales have dropped for two consecutive months in January and February after 14 straight months of growth.
In February, market leader Maruti Suzuki India saw its domestic car sales decline by 3.94 per cent to 87,149 units as against 90,728 units in the same month last year. Rival Hyundai Motor India Ltd (HMIL) also witnessed a decline of 12.7 per cent at 32,442 units last months as against 37,163 units in February last year.
Total two-wheeler sales in February rose 12.76 per cent to 13,62,219 units as against 12,08,084 in the year-ago period. “There is a rebound in the motorcycle segment. We are seeing the rural market coming back slowly and the various measures announced in the Budget for farm sector and infrastructure should help improve the demand,” Sen added.
