New Delhi, March 12: Car sales hit the skids in February tumbling by 22.7 per cent as buyers held off purchases in the hope that prices would head downwards after the budget ó a hunch that did after all prove correct.
The latest sales figures from the Society of Indian Automobile Manufacturers (SIAM) say total car sales fell in February after eight successive months of growth to 37,446 cars from 48,444 cars in February last year.
The government had announced an 8 per cent excise duty cut on passenger cars in the budget. Besides a 5 per cent cut in customs duty on imported components.
Automakers reacted fast by cutting prices by around 5 per cent. Perhaps they could have slashed prices more, but the auto-manufacturers realised that wasnít possible as steel prices, which make up a bulk cost, have been going up over the last six months and the cuts helped cushion that hike.
The duty cut also saw several companies unleashing a number of new cars, which were waiting in the wings, on Indian roads.
Ford India today added one more to this tribe with its limited edition Finesse model, a part of the Ford Ikon NXT range. These launches, of course, are betting that with the price cut car sales will pick up this spring and summer. Immediately after the budget Ford reduced prices on its Ikon sedan by around Rs 22,488-Rs 30,268, Skoda India by Rs 56,000 on Octavia while the price of Hindustan Motorís Lancer has been rolled back by Rs 32,700-Rs 50,000. Maruti Udyog reduced prices by Rs 10,884-Rs 37,664 on its product portfolio.
The SIAM figure shows that sales of cars and utility vehicles combined were flat in 2001-02 but have risen 6 per cent in the first 10 months of this year to January, relying largely on price cuts and discounts. Post-budget, the auto industry is hoping that low prices will spur demand and pull the industry and its ancillary units out of the rut where demand has been badly crimped.