December 2015 is different from December 2014 in many ways, for car makers. The excise duty sop of up to 6% drove sales till the last month of calendar 2014, with manufacturers and buyers making the most of the excise duty benefit that lapsed on 31 December, 2014.
Domestic car sales were up 15.2% to 1.53 lakh units in December 2014, from 1.33 lakh units in December 2013.
December 2015 is a different ballgame altogether, with bad news pouring in from all sides.
First, the Chennai floods disrupted production in the first week of the month for many car makers such as Hyundai, Ford, Renault and BMW who have their manufacturing facilities near Chennai.
The second spoiler is the high levels of pollution in cities like Delhi, leading to a clamour for a ban on diesel cars that still account for a sizeable chunk of cars sold in India. With the price gap between petrol and diesel narrowing, diesel car sales have declined steadily to 37% in 2014-15, from 42% in 2013-14 and 47% in 2012-13, according to industry body, the Society of Indian Automobile Manufacturers. Yet, they do account for a significant share, enough to dent the toplines and bottomlines of many car makers.
Coming to the buoyancy the segment has witnessed, passenger car sales grew 10.39% in November this year at 1.73 lakh units, riding high on an uptick in the economy. But the 13-month growth that lasted till November this year could well be dented in the coming months.
The recent decision of the National Green Tribunal to ban sale of diesel vehicle sales in Delhi till 6 January is bound to impact car makers, as the national capital accounts for about 7% of passenger cars sold in India.
While diesel passenger vehicle makers such as Tata Motors, Mahindra & Mahindra are Maruti Suzuki will be hit, the switch to petrol cars, if it happens – highly unlikely in view of the odd-even policy that the AAP government plans to implement in Delhi – could benefit Ford India, Hyundai and Honda.
Given these realities, sales of passenger cars are unlikely to go up this month, bucking the year-end trend of higher car sales usually witnessed in December to avoid the impact of price hike.
Most car makers, including Maruti Suzuki, Hyundai Motors India, Renault India, BMW, Mercedes Benz, Toyota Motor Kirloskar and GM India have announced price hikes of up to 3% on account of rising input costs, besides a depreciating rupee that pushes up landed cost of components.
But it is unlikely to accelerate car sales, as has been the case in the past.