Two big Indian automakers saw their domestic August sales tumble down on rising fuel costs and interest rates and the worst is yet to come, as the industry will feel more pain from declining profit margins due to weak currency.
Some automakers move to curtail production and reduce labor costs, as industry-wide car sales declined for nine straight months to July. Tata Motors Ltd said local vehicle sales fell 33% last month, while passenger car volumes at Mahindra and Mahindra Ltd, the country’s largest sport-utility vehicle maker, slid 28%.
On the bright side, passenger vehicle sales at Maruti Suzuki India Ltd, the country’s biggest carmaker by market share, doubled in August but that was mainly a reaction to a weak month last year when labor unrest resulted in a factory shutdown.
With the industry heavily reliant on imported auto parts, some foreign automakers, such as General Motors Co and BMW, have moved to raise prices and more are expected to follow suit, providing new deterrents to spending. The Indian auto sector is down 7.9% for the year to date, compared to an average 20.7% climb for global auto stocks.