The NewsYet – Passenger vehicle sales decline most in 18 years – Times of India
The NewsYet –
NEW DELHI: Sales of cars and SUVs crashed the most in a month in 18 years as the slowdown in the economy and factors such as job losses and tight liquidity kept buyers out of the market. This is the seventh straight month of decline for passenger vehicles.
According to data released by industry body Society of Indian Automobile Manufacturers (Siam), a total of 2.39 lakh passenger vehicles (cars, UVs/SUVs and vans) were sold in May 2019, down 21% from 3 lakh units in the same month in the previous year. In April,
were down 17%.
The passenger vehicle industry is saddled with heavy inventory, despite offering deep discounts and freebies. The industry is now petitioning the government for a cut in GST rate. “Buyers need affordability. The situation is very serious,” Vishnu Mathur, director-general of Siam, told TOI.
The numbers speak for themselves. Despite addition of new models such as Hyundai’s hatchback Santro, Maruti’s tallboy WagonR, Tata’s Harrier off-roader, and Mahindra’s Marazzo and XUV 300 SUVs, buyers are still not warming up to new launches.
Another worrying issue for automobile players is the transition to the stricter BS6 emission norms from April next year. The move will result in a hike in vehicle prices, while diesel — which is popular in SUVs and luxury vehicles — will see a significant upward price revision.
“We have never seen such a prolonged spell of negatives. It is tough. Markets can de-grow sometimes, but this was unexpected. We didn’t prepare for this,” said Vikas Jain, the head of sales at Hyundai India.
Slowdown in both urban and rural markets is another alarming situation for the industry. Buyers in cities such as Mumbai, Bengaluru, Delhi and Chennai do not purchase with the same tempo as earlier due to factors such as growing popularity of shared mobility (Olas and Ubers), rising congestion on road, and improving public infrastructure. The distress in rural segment with stretched farm incomes has only compounded the problems.
Companies do not see fresh investments and expansion till the situation improves. “Customers have been cautiously spending, which has led to sluggishness. Added factors like liquidity tightening, high insurance costs, increase in fuel costs have also weakened retail sales,” N Raja, deputy MD at
Kirloskar Motor, said.
chairman R C Bhargava has also said demand will continue to remain uncertain through most parts of this fiscal. The company has refused to give a confirmed forecast for this year, saying its growth can vary between 4% and 8%. Siam’s Mathur said the government needs to bring down GST rate for the auto industry from 28% to 18%. Rajesh Goel, sales and marketing director at Honda Cars India, said the pulse is still missing even though election-related buying nervousness is over.