Updated December 10, 2012, 5:42 a.m. ET
.India's November Car Sales Drop 8.3%
By SANTANU CHOUDHURY And RAKESH SHARMA
NEW DELHI--Car sales in India fell for the third time in four months in November as rising fuel prices, high borrowing costs and fears of job losses in a slowing economy crimped demand.
The sales decline intensifies worries among car manufacturers that the local market is unlikely to rebound in the current financial year through March.
Local sales fell 8.3% to 158,257 cars in November from 172,493 a year earlier, according to data issued Monday by the Society of Indian Automobile Manufacturers, or SIAM.
Sales in December will lag those in each of the previous three months, despite year-end discounts by companies to clear stocks, said SIAM Director-General Vishnu Mathur.
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Customers speak to a sales executive at a car showroom in Mumbai on Nov. 10. Car sales in India fell 8.3% from a year earlier in November.
."There is a lot of uncertainty in the market. People are not sure of their jobs," said Mr. Mathur." This is impacting sales."
The drop in November comes after a 23% sales jump in October.
Sales in October were driven by higher dispatches from factories ahead of the main Hindu festival of Diwali, celebrated in early November, and also because of comparison with a low base.
Car sales in India are counted as factory dispatches, not retail sales.
Despite the current slowdown, India is considered one of the biggest emerging markets for automobiles globally.
The growth potential has led companies such as Volkswagen AG, VOW3.XE -0.48%Ford Motor Co., F +2.14%Hyundai Motor Co., 005380.SE +0.66%Nissan Motor Co. 7201.TO -0.77%and Renault SA RNO.FR -0.03%to invest billions of dollars in building new factories in the country. More companies are planning to enter the Indian market.
Sugato Sen, SIAM's deputy director general, said China's Beiqi Foton Motor Co. 600166.SH +0.32%has purchased a plot of land at Chakan in the western Indian state of Maharashtra to build a commercial-vehicle factory.
Another Chinese auto maker, Great Wall Motor Co., 2333.HK 0.00%is also considering a plan to enter the Indian market, Mr. Sen said.
Their plans for India come despite the local auto industry facing a tough business climate.
SIAM has recently lowered its forecast on India's car-sales growth to between 1% and 3% this fiscal year from 9%-11%. The auto body has also cut its forecast on motorcycle and scooter sales growth to 5%-7% from 11%-13%.
"Going ahead, we expect the demand scenario to remain challenging as the slowdown in economic growth coupled with higher interest rates and fuel expenses continue to dampen consumer sentiments," Yaresh Kothari, an analyst at Mumbai-based Angel Broking, wrote in a recent note.
In November, sales of Maruti Suzuki India Ltd., 532500.BY -1.13%the local market leader and a unit of Suzuki Motor Corp., 7269.TO +0.21%increased 2.3% to 74,793 cars.
Second-ranked Hyundai posted a 0.5% fall in November sales to 34,698 cars. Sales of Tata Motors Ltd., 500570.BY -0.69%which makes the Nano minicar, plunged 42% to 13,538 cars.
Car makers such as Ford, General Motors Co., GM +2.52%Nissan, Volkswagen and Toyota Motor Corp. 7203.TO 0.00%also recorded lower sales in India, while Honda Motor Co., 7267.TO -0.69%Renault, BMW AG, BMW.XE -0.54%Audi AG NSU.XE +0.97%and Daimler AG DAI.XE -0.80%posted growth.
Sahil Kedia and Rohit Goel, Mumbai-based analysts at Barclays Capital, said recently that demand for SUVs and diesel cars as well as the introduction of new vehicle models will "drive volumes in the near term."
In India, diesel cars are preferred over gasoline models because of a big difference in the prices of the fuels.
The government regulates and subsidizes the price of diesel, which is 30% cheaper than gasoline at New Delhi retail outlets.
Car sales during the April-November period grew 1.3% to 1.24 million autos. At the same period, sales of SUVs, most of which are diesel-powered, climbed 62% to 357,872 vehicles.
In the truck and bus segment, local sales in November declined 7.3% to 61,410 vehicles. The drop was due to a 33% fall to 17,441 units in the sales of medium and heavy commercial trucks and buses.
Tata Motors, which leads the market for commercial vehicles, posted a 9.7% decline in sales to 35,807 vehicles. Ashok Leyland Ltd. 500477.BY -1.43%and Mahindra & Mahindra Ltd., 500520.BY -0.90%however, reported an increase.
Motorcycle sales remained almost flat in November at 867,518 units, compared with 867,088 a year earlier.
Hero MotoCorp 500182.BY +0.83%Ltd.--the largest maker of motorcycles in India--second-ranked Bajaj Auto Ltd. 532977.BY +1.01%and Yamaha Motor Co. 7272.TO -0.43%recorded lower sales in the past month.
Honda, TVS Motor Co., 532343.BY 0.00%Suzuki and Royal Enfield Motors, however, recorded higher motorcycle sales.
Motorcycle sales were subdued partly due to weak demand in rural India, said SIAM's Mr. Mathur.
Scooter sales rose 6.6% to 244,392 units in November.
Mr. Mathur said the expansion could mainly be due to a growing number of young customers in cities preferring such vehicles.
India's November Car Sales Drop 8.3% - WSJ.com