The new financial year kicked off on a disappointing note for the Indian automobile industry with sales declining across all four segments. The demand was impacted by a weak consumer sentiment due to factors such as political uncertainty, high insurance costs, liquidity crunch and rise in commodity prices that forced car makers to increase vehicle prices.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), total sales across all categories fell by nearly 16% to 20.01 lakh units from 23.80 lakh units in April 2018.
“In the last ten years, we have not seen anything like this when all the segments are down. The start of the new financial year has not turned out to be very good for the industry,” SIAM Deputy Director General Sugato Sen said.
8-year low for PVs
Domestic wholesale passenger vehicle (PV) sales dipped 17.07% — steepest fall in nearly eight years, to 2.47 lakh. Within PVs, cars sales declined nearly 20% to 1.60 lakh units, while utility vehicle sales fell 6.67% to 73,854 units and van sales were down 30% to 13,408.
“The sentiment in the market is not very good… It is not only in the auto sector…FMCG segment is also witnessing a slowdown. Discretionary spends are being held up. Maybe things will improve after the election results are over and a stable government is formed. We expect things to get better in the second half,” SIAM Director General Vishnu Mathur said. He pointed out that the retail sales were better than wholesale during the last month.
Sales of commercial vehicles, which are usually seen as an indicator of economic growth, declined almost 6% to 68,680 units. While medium and heavy commercial vehicle segment fell 13.56% to 24,725 units and sales of light commercial vehicle were down 1.10% to 43,955.
Likewise, two-wheeler sales plunged 16.36% during the month under review to 16.38 lakh units.
While scooters sales sunk 25.89% to 4.89 lakh units, those of motorcycles and mopeds declined by 11.81% to 10.84 lakh units and 5.88% to 63,725 units, respectively. Three-wheeler sales too were down by 7.44% to 46,262 units.
The industry players have in the recent past cautioned that this year will be a “tale of two halves” with little improvement expected post May — once elections are over. For 2019-20, SIAM has forecast a modest sales growth of 3-5% for PVs, 5% to 7% growth for two-wheeler and 10-12% growth for commercial vehicles.
The vehicle production also declined across segments in April 2019. Production for PVs, CVs, two-wheelers and three-wheelers was down 7.72%, 9.53%, 11.55% and 4.72%, respectively. Total vehicle production was down 10.6% last month.