SUV exports, luxury car sales defy Indian auto industry’s downward spiral

The India automotive industry continues to remain sluggish as the rupee drops to an all time low of Rs 66.26 a dollar. With rising fuel prices, sharp rupee depreciation and poor job security forcing prospective customers to put of their plans of buying a new vehicle, annual car sales fell 6.7 per cent in 2012-13 for the first time in a decade.

A Renault being exported to South Africa

Despite a number of discounts and other incentives, car sales have fallen steadily since January on a year-on-year basis, and the domestic car sales are likely to decline further with the automakers left with little choice but to hike prices to counter the rupee's free fall.

This fiscal year itself, the sales in the passenger vehicle segment has shown a drop of 7.49 per cent – from 10,69,579 to 10,11,376 units - in April-July period as compared to the same period the previous year, while the year-on-year comparison for the month of July shows 8.31 per cent drop in sales, says a report published by Society of Indian Automobile Manufactures (SIAM).

In July 2013, the production has grown by 8.67 per cent as compared to July 2012 which can be largely attributed to the 19.19 per cent rise in export.

The worst hit segment among the passenger vehicles is the passenger cars segment that saw a 9.73 per cent drop - from 6,26,672 units in April-July 2012 to 5,65,714 in the same period this year.

Though sales of utility vehicles fell 1.03 per cent in the period, the segment has been a rare bright spot in India's otherwise gloomy auto market, especially due to launch of a number of new SUVs. The new Renault Duster and Ford EcoSport are largely responsible for the 8.48 per cent rise in production, and softening the blow of falling sales numbers in the segment.

The new SUVs along with Mahindra's ambitious foray abroad has pushed the export figures of UVs from a dismal 2,378 units in April-July 2012 to a significantly more respectable 8,883 units, of which 6,611 units belong to the Duster and EcoSport alone, during the same period in 2013-14.

The market for luxury cars is picking up pace with a three-way battle between three German luxury automakers - Audi, Mercedes-Benz and BMW

While the economy is slowing down, the market for luxury cars is picking up pace with a three-way battle between three German luxury automakers   - Audi, Mercedes-Benz and BMW.

Compared to 2011-12, which saw a handsome growth of 46 per cent (25,645 units compared to 17,550 units in 2010-11), in 2012-13 the market grew 6.6 per cent to 27,357 units.

In the first four months of the current fiscal year, the sales number has already crossed the 9,000 mark, although the exact number is unknown with BMW and JLR refusing to reveal their sales figures.