Here’s why India’s monthly car sales recorded the highest drop since 2011

• With 246,000 units sold, domestic passenger vehicles sales recorded a 17% drop in April 2019 - the sharpest decline since October 2011, when car sales fell by nearly 20%.
  
• The latest drop was largely attributable to India’s elections, as uncertainty over the outcome has likely caused consumers to delay purchases, and market volatility.
  
• India’s auto industry is coming off its slowest annual sales growth in five years. Passenger vehicle sales grew by around 3% to a mere 3.4 million units amid higher insurance costs, a growth in ride-sharing and a financing crunch.
  
• This, in addition to an adjustment to new safety and manufacturing norms, contributed to a decline in wholesale dispatches heading into the current fiscal year.

The sales crunch in the Indian auto industry persists.

With 246,000 units sold, domestic passenger vehicles sales recorded a 17% drop in April 2019 - the sharpest decline since October 2011, when car sales fell by nearly 20%. Prior to that, the sharpest drop in the preceding eight years occurred in February 2013, when sales fell by 16.7%.

The latest drop was largely attributable to India’s elections, as uncertainty over the outcome has likely caused consumers to delay purchases, and market volatility.

Even India’s largest carmaker, Maruti Suzuki, had a tough go of it last month. The company - which accounts for more than half the market - posted a 19.6% decline in sales to 131,385 units in April. The carmaker was given a hint of respite, however, by the commercial vehicle segment, which grew 50% to 2.319 units.

Interestingly, Honda defied industry trends by recording a 23% increase in sales to 11,272 units. This was largely due to the launch of the latest version of its Amaze model.

India’s auto industry is coming off its slowest annual sales growth in five years. Passenger vehicle sales grew by around 3% to a mere 3.4 million units amid higher insurance costs, a growth in ride-sharing and a financing crunch.


This, in addition to an adjustment to new safety and manufacturing norms, contributed to a decline in wholesale dispatches heading into the current fiscal year.

Despite the sluggish sales numbers, carmakers are preparing to increase their hiring this fiscal year. In response to emissions norms, new technologies and the need to boost manufacturing capacity this year, hiring in the auto industry could increase by as much as 15% this year, as per a survey by PeopleStrong, a Gurugram-based HR services firm.

Meanwhile, sales could pick up after elections conclude, but a short-term spike in oil prices - a likely outcome of a halt in India’s oil imports from Iran - could offset this.


SEE ALSO:

Carmakers in India are looking for a new breed of techies in a changing market

Indians are one step away from buying cars online