NEW DELHI, NNA – India’s new vehicle and motorcycles sales are facing a continuing slump, suffering the largest monthly fall ever in August as tightened auto loans and insurance premium hikes have continued to dampen consumer sentiment.
The August sales of new autos and motorbikes plummeted 33.2 percent and 22.2 percent from a year earlier, registering 10 and nine straight monthly declines, respectively, data of the Society of Indian Automobile Manufacturers showed Monday.
The world’s fourth-largest automobile and biggest motorcycle markets have experienced unprecedented downturn, posting their worst falls since statistics became available in 1997.
“The automobile industry really needs government support on various parameters at the moment. Any government stimulus would help auto makers to get rid of BS 4 (Bharat Stage 4) vehicles in a situation of high inventory,” Mitul Shah, auto analyst at Reliance Securities Ltd., said in an email statement to NNA Wednesday.
The government intends to make a transition from existing Bharat Stage 4 vehicle emission standards to Bharat Stage 6 in April next year. “We believe that the government’s serious focus on revival of the auto industry would turn investor sentiment positive towards the sector,” Shah added.
New auto sales in August stood at 248,421 units, with those of passenger cars, excluding utility vehicles and vans, posting a 41.1 percent plunge on year to 115,957 units. Sales of commercial vehicles also dropped 38.7 percent to 51,897 units, according to the data.
Cumulative new vehicle sales in the April-August period in the current fiscal year decreased 22.6 percent over the same period last year to 1,426,991 units, the data showed.
Sales of motorcycles in the reporting month registered 1,514,196 units, declining at a faster pace than the 16.8 percent year-on-year drop in July, according to the data.
The bankruptcy of major automobile loan provider Infrastructure Leasing & Financial Services Ltd. in late 2018 forced other non-banking financial institutions to tighten their lending practices and triggered the sales slump, according to a report by Reuters.
“A few factors like BS 6 transition, e-vehicle implementation and expected flash sales of BS 6 vehicles toward the end of this fiscal year to March 2020 have also confused consumers to some extent and led to their deferring purchase decisions,” Shah said.
“We expect the slowdown to continue, as rural demand is yet to pick up pace due to a liquidity crisis” in the non-banking space. Several rural markets are “impacted by excessive rainfall, creating temporary disruption,” he said.
In response to concerns over a government plan to raise vehicle registration charges amid slowing sales, it announced on Aug. 23 the postponement of the fee hike to June next year.