Sales fall as people in metros start ditching cars

NEW DELHI: Traffic jams, parking problems, app-based cabs, online shopping and fast-spreading metro networks have resulted in car sales starting to fall in big cities, something many hoped for but few expected to become a reality.

City-specific numbers accessed by TOI from industry sources show car sales dropped 20 per cent in Mumbai in 2017-18—97,274 cars sold during the year versus 1.22 lakh in the previous year. Bangalore, with its choked infrastructure but younger and tech-savvy population, saw car sales fall 11 per cent. Bangalore is India's second-largest car market.

The country's largest car market, Delhi, recorded a marginal growth of 1.6 per cent, and that too because of the lower base of 2016-17 when diesel car sales were banned for a few months.


Falling or flat metro markets in a year when all-India sales grew by 10 per cent is seen as an evolutionary trend, and not an aberration. "Metro cities are surely seeing challenges in volume growth on account of rising trend of shared mobility through platforms such as Ola and Uber," says Rakesh Srivastava, director (Sales & Marketing) with Hyundai India.

"The other key factor is rapidly-growing metro transportation, especially to key employment hubs such as Gurgaon and Delhi. People prefer to take the metro than driving and getting stuck in jams," Srivastava adds.

Senior industry officials also point to a small but growing trend of people not planning a second car -- or even selling it. "If the woman of the house earlier had a car for household chores, she now either orders online or simply calls for an app-based cab. There is no hassle of driving, looking for a parking spot, or getting stuck in traffic," says an industry veteran who requested anonymity. He also feels that for city-only commute relying on shared mobility makes better financial sense than owning a car.

N Raja, Deputy MD at Toyota Kirloskar, says fewer purchases by drivers of fleet operators and shared mobility platforms have also contributed to the decline. This has happened because companies such as Ola and Uber have brought down driver incentives.

GST implementation too impacted the fleet purchase. "Fleet sales dropped nearly 50 per cent in 2017 as compared to year 2016, primarily due to initial implementation issues with the GST," Raja adds.

Rajesh Goel, director sales and marketing at Honda Cars India, says growing road congestion will make it tough to increase car demand in big metros. "However, this can be offset by growing our volumes in smaller towns and non-metro areas," he adds.

Growth in smaller towns and cities continues to be fueled by aspirations for a personal four-wheeler. Sales in Lucknow were up 25 per cent in 2017-18 over 2016-17. Jaipur, Ahmedabad and Chandigarh grew 15 per cent and Kochi by 7 per cent.