The car sales in the country witness a decline after a continuous growth for 5 consecutive years. In the past months, vehicles in the industry have fallen by a substantial number. In October vehicles declined by 6.59% to 98,900 and November seem to observe an even greater fall.
In fact the terrorist attack is likely to depress this sales figure even more. Mumbai which is second largest car market in India sells about 7,000 to 9,000 cars per month but now the terror attack has eliminated more than half of the expected sales figure in the city.
General Motor's vice-president (sales & marketing), Ankush Arora said: "These year-end months are typically lean, but sales are just not picking up this time round. There has been some concession from PSU banks but customers are still bearing the increased cost of credit. And the Mumbai terror attacks will also have their impact. The next few months will be a real struggle for the car industry," General Motor's vice-president (sales & marketing) Ankush Arora said.
All the leading car makers including Maruti Suzuki India, Hyundai Motor India (HMI), Tata Motors, Honda Siel Cars India and likes are likely to see a decline in their sales figure in the coming months. A senior official from Maruti Suzuki said, "It is the worst month of the fiscal in terms of sales. Retail sales have hit rock bottom, despite high discounts. We have tried every trick to get footfalls, even at the cost of our profits, but the market is not reviving. November is the start of the real-time meltdown in passenger car sales."
The slowdown in the industry started increasing towards the mid-year following the rising prices, soaring interest rates and global financial crisis. The increasing interest rates had made the car loans expensive for the consumers who postponed or even cancelled their purchase.
As the growth rate has turned negative, cars dealers are not planning to disburse new cars without reducing on the inventory pile. An official at Federation of Automobile Dealers Association said, "Dealers are stacked up with hundreds of vehicles which would have normally made their way to people's driveways a year ago. Times have changed with potential customers worried about whether they'll keep their jobs, be able to meet the fuel costs or qualify for a car loan."
The fall in the car sales by major auto dealers in the industry is likely to impact the auto loan portfolios of the banks. The car loan rates which are of prime importance for any car buyer need a downward revision to partly overcome the crisis faced by the auto industry.