This week in Auto: September car sales dip 5.6%, luxury car demand disappoints

October did not kick off on a bright note, clouded by a dip in numbers now stretching to September, the third consecutive monthly dip in demand. The sobering news has cast a shadow of doubt over the festive period which began this week.

Nevertheless, companies are going ahead with new car launches despite the challenges on the retail side. And this can be said to be true even for luxury car makers, more on this later. Here’s a look at all the important developments during the week.

September car sales dip 5.6 percent on poor demand

Passenger vehicle sales declined 5.61 percent to 2,92,658 units in September from 3,10,041 units in the same month of the previous year. Motorcycle sales in September however, rose 7.04 percent to 13,60,415 units as against 12,70,885 units in the same month last year.

Kinetic’s Motoroyale launches new 7 bikes

Motoroyale, the premium bike division of the Pune-based Kinetic group, on October 11, launched seven bikes in the premium and luxury range with prices starting at Rs 3.37 lakh (ex-showroom)

The company also announced tie-ups with three companies — SWM, FB Mondial and Hyosung — taking the total count to five. Motoroyale will now retail bikes from the Norton, SWM, MV Agusta, FB Mondial and Hyosung stables.

Mahindra enters vehicle leasing business

Mahindra & Mahindra has ventured into vehicle leasing for retail customers through a tie-ups with Orix and ALD Automotive. M&M will supply vehicles and bill the customer through the two vehicle leasing companies. The car maker is hoping for a 5 percent rise in volumes through this association.

Hyundai Santro make a comeback after 5 years

Although Maruti Suzuki discontinued the Santro brand in 2014, Hyundai has decided that the car needs to come back. And come back it will on October 23 in a new avatar bearing its old name -- Hyundai Santro. This will be the first all-new model from the Korean car maker in over a year.

The Hyundai Santro will take on rivals like the Maruti Suzuki Wagon R and Maruti Suzuki Celerio, with the base variant likely to be priced starting Rs 4 lakh. Pre-bookings for the car will start on October 11 for a sum of Rs 11,100 for the first 50,000 customers which would be followed by a price rise.

Tata Motor-owned JLR to shut plant

Tata Motors-owned Jaguar Land Rover reported a 12.3 percent decline in its global sales at 57,114 units in September over a lower demand in China where sales declined by 46.2 percent in the time period.

The carmaker will close its Solihull plant for two weeks later this month as import duties and a trade war with the US hurt demand. China's automobile sales have been falling in recent months, with a slowing economy and trade frictions making consumers cautious about spending, an industry body said last month.

Luxury car demand slow down

Sales of India’s largest luxury car maker Mercedes-Benz slowed down in the first nine months of this year after inflationary hikes and rise in interest rates hit the demand for luxury cars.

Mercedes’ sales declined 11,789 units, a dip of 1 percent compared to 11,869 units sold in the same period last year. But the German car maker is not alone.

Rival BMW also showed signs of a slowdown during the same period. Its sales grew slower during the July to September quarter thereby impacting the January to September period growth. BMW sales grew 11 percent during January to September while its January to June sales had grown by 13 percent. The maker of 3 Series and X5 cars said it sold 7915 units during Jan-Sep period.

These companies are also reeling under financial pressure due to the falling rupee which had touched Rs 74 per US Dollar. Many of the models retailed in India are assembled within the country which including the assembly of their engines.

These are the first real signs of a slowdown in the luxury car demand in several years as India bucked the world-wide trend for sales of luxury cars. With the slapping of new taxes by the central government in addition to the negative buyer sentiment has hurt demand. The dip in off-take comes at a time when the passenger car demand slipped for the third consecutive month in September

In a statement Mercedes-Benz said it faced significant headwinds in terms of prevailing micro-economic factors like rising interest rates, inflationary hikes, the depreciation of the rupee, rising import costs etc. which has slowed down demand and may force the company to look at a price revision.

Volvo the smallest of the luxury car makers bucked the trend once again by posting a sales growth of 34 percent to 1,896 units as against 1,413 units clocked during the same period last year.