Mixed performance by automakers: Here are the losers and winners

India’s top car makers posted lacklustre sales in May as an excise tax hike and rising fuel prices hit demand, casting more gloom over the country’s economic outlook.

Car makers are struggling to hit a sales target set by the local industry body as India’s economy grows at the slowest pace in nine years, hurting an industry that has been one of the country’s best performers over the past decade.

“Things are not looking good,” said Sugato Sen, senior director of the Society of Indian Automobile Manufacturers (SIAM), which has forecast 10 to 12 percent sales growth in the fiscal year to March 2013. “We did not expect that sales would be so low. The economic sentiment is not positive.”

[caption id=“attachment_329263” align=“alignleft” width=“380” caption=“Car sales rose 30 percent in last year, attracting billions of dollars in investment from Ford and Nissan. Reuters”]  [/caption]

Maruti Suzuki, the biggest car maker with a 45 percent market share, said passenger car sales fell 5.9 percent from a year earlier. Tata Motors , the country’s No.3, posted a 6 percent increase.

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Ford, which manufactures cars in India, said its sales in the country fell 14 percent. General Motors reported a 27 percent slide in sales. TVS Motor , the country’s third-largest two-wheeler manufacturer, said its sales declined 4.8 percent.

The government raised petrol prices by around 11 percent last month, hurting car makers already reeling from an excise hike announced in the federal budget in March and a weakening of the rupee that is jacking up import costs.

India’s economy grew 5.3 percent in the first three months of 2012, compared with 9.2 percent a year earlier, with the manufacturing sector contracting 0.3 percent.

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Car sales in the country rose 30 percent in 2010/11, attracting billions of dollars in investment from automakers such as Ford, Nissanand Renault. But a slowing economy dragged sales growth down to 2.2 percent in the last fiscal year.

Mahindra & Mahindra , the country’s top utility vehicles maker, said this week that due to “continued weakness in the domestic macro environment, the near-term outlook for the economy is quite challenging.”

However, the company’s car sales rose 27 percent while Toyota Kirloskar Motor continued its good show this fiscal by selling 15,501 units last month, up from 7,470 units sold last year. Similarly, Nissan Motor India also reported 98 percent increase in its car sales last month as compared to last year. The company sold 3,138 units last month, up from 1,588 units sold in May 2011.

Nissan will also launch a new model Evalia later this year and Datsun in 2014 and is expected to play a crucial role in the Japanese parent Nissan Motor Company’s India strategy, it said.

Agencies