India Sales Tumble in October

MUMBAI – Vehicle sales in India dropped 24.3 % in October compared with year-ago to 138,521 units, according to WardsAuto data.

Inventories of gasoline-powered cars continued growing, despite generous discounts offered by dealers. But the waiting list for diesel-powered cars is lengthening as manufacturers delay investment while waiting for the government to clarify its policy on diesel-fuel pricing.

Mini among new players in India.

“Demand for petrol (gasoline) cars has been hit hard,” says Vishnu Mathur, director-general of the Society of Indian Automobile Manufacturers. “Though customers are keen to purchase diesel cars, production is a major constraint.”

Auto makers’ other concerns include interest rates that have been raised 13 times in the past 18 months and fuel prices that have doubled in 24 months.

But they nevertheless are optimistic about the future, with most of them developing new models for domestic and export markets.

January-through-October car sales were up 3.5% to 1.56 million units, while light-vehicle sales rose 7.6% to 2.28 million, WardsAuto data shows.

Audi, BMW and Mercedes luxury models may miss their 2011 sales targets. BMW and Mercedes-Benz each anticipated 10,000 deliveries this year, but sales over the year’s first 10 months totaled just 7,150 and 5,635 units, respectively.

Although growth rates have slowed, luxury auto makers keep expanding their offerings in India, the latest being BMW’s Mini. Even Ferrari is adding two models to its Indian lineup.

The auto makers’ association also reports that year-to-date passenger-car exports increased 19.5% to 293,426 units. Commercial-vehicle sales, including exports, grew 18.8% to 483,032 over the same period.

Prices of steel and other materials have risen steeply over the past six months, but auto makers including General Motors India, Honda Siel and Hyundai have not raised prices. “We are not hiking prices, because the market is very sluggish,” says P. Balendran, vice president-GM India.

Tata and Toyota Kirloskar reluctantly increased some vehicle prices in October.

Despite raising prices 1.5% to 2% on three occasions this year, Mahindra & Mahindra had continued success with a product mix including the new Xylo multipurpose vehicle and XUV500 luxury SUV.

October deliveries climbed 19.1% to 30,899 units and January-October sales jumped 21.2% to 278,958.

The auto makers’ association is reported to have asked the government to reduce excise duties on sedans from 22% to 16%, and to abolish Rs15,000 ($300) additional duty on cars with engine capacity of more than 1.5L.