Auto sales at 20-year nadir in 2019: SIAM

NEW DELHI: Automobile sales in India last year fell the most in more than two decades, as slowing economic activity, high vehicle prices and stricter lending rules damped demand.

In passenger vehicles, an easing in the pace of decline in December, though on a low base, and an improvement in the rolling average in the last three months of the year led the industry to suggest that the worst may be over.

Sales across the automobile sector, from passenger vehicles and commercial vehicles to two- and three-wheelers, fell 13.77% to 23.07 million units in 2019, as per data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday. Passenger vehicle and two-wheeler sales fell the most since the industry started reporting numbers, by 12.75% to 2.96 million and 14.19% to 18.57 million units, respectively, last year. The fall in commercial vehicles was the most in six years at 15%, to 854,759 units.

In December, sales of passenger vehicles such as cars, utility vehicles and vans fell 1.24% to 235,786 units. Sales of commercial vehicles and two-wheelers declined by 12.23% to 66,622 and 16.6% to 1.05 million, respectively, while overall, sales dropped 13.08% to 1.41 million. “In passenger vehicles, the three-month rolling average is indicating a trend reversal,” SIAM president Rajan Wadhera said. “Enquiries have started going up, but sentiments have not improved to a level where we can see growth. That will take some more time.”

Slowdown in the broader economy and weak consumer sentiment continue to impact fundamental demand, he added.

New launches in the utility vehicle segment did help draw some buyers. For the year, while sales of passenger cars fell 18.91%, those of utility vehicles rose 4.78%. Utility vehicles accounted for 34% of sales of passenger vehicles in the Indian market during April-December, the first nine months of the ongoing fiscal year, compared with 13% in fiscal 2011.

A sharp increase in acquisition costs due to higher insurance premium and implementation of stringent safety rules hit two-wheeler sales. While sales of scooters dropped 16.03%, those of motorcycles fell 12.92%.

SIAM president Wadhera cited farm out, which he said was “not good” last year, along with high vehicle prices for the steep fall in motorcycles sales in rural areas.

Wadhera expects demand to increase in the coming months ahead of the switchover to BS-VI emission standards on April 1, when prices are set to go up.

“BS-VI will add 8-10% to vehicle costs. Individual organisation will not be able to wholly absorb this cost and will have to pass it on to customers. This will have an impact on demand,” he said. “We expect some pre-buying this quarter. If the government announces the vehicle scrappage policy, it will help the industry.”