India’s SUV boom runs out of gas
August 13, 2013 Leave a comment
August 12, 2013 1:20 pm
India’s SUV boom runs out of gas
By Henry Foy in London and James Crabtree in Mumbai
India’s car sales contracted for a record ninth consecutive month in July, as sales of sports utility vehicles, previously the industry’s only bright spot, fell for the first time in four years. The country has been hit by sluggish economic growth and high interest rates that have curtailed demand in a once-booming market that has attracted billion-dollar bets from almost all of the world’s major carmakers.Sales of SUVs and other larger 4×4 cars had beenpropping up a sector that shrank for the first time in a decade last year, but the continued economic gloom and a tax increase on the vehicles has put it into reverse.
“This segment was the last hope for the Indian market,” said Deepesh Rathore, a New Delhi-based automotive analyst. “It also isn’t a short-term phenomenon, I think we are heading for at least a few more months of negative growth, and both the calendar and financial year will definitely now end in a negative position.”
India’s car market, which a few years ago was touted as one to rival China by the end of the decade, had tempted global marques such as Ford, GM,Volkswagen and Nissan to spend big on local production facilities.
But the sector has failed to live up to expectations so far, and the fall in SUV sales ends a growth market that is key for models such as the Ford EcoSport and Renault Duster, and is dominated by local player Mahindra & Mahindra.
India raised duty on SUVs by 3 percentage points in March.
“Obviously the slowdown has played a part and we always said the 40 or 50 per cent growth we saw last year wasn’t sustainable,” said Sugato Sen, deputy director-general of the Society of Indian Automobile Manufacturers (Siam). “[But] this sudden recent decline after the duty wasn’t anticipated at all.”
Overall, passenger vehicle sales in India last month fell 8.3 per cent, according to data released by Siam on Monday. Sales of SUVs fell 17.5 per cent, the first monthly decline since June 2009.
So far this year, passenger vehicle sales in the country are 7.5 per cent down on last year’s figures.
The one bright spot for manufacturers in July was a 19.6 per cent rise in exports, led by an almost sixfold increase in SUVs leaving the country’s ports – mainly Dusters and EcoSports heading to Europe.
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