Vehicle sales in the country across categories — four-wheelers, two-wheelers and commercial vehicles — declined in December 2018 as manufacturers dispatched lower number of vehicles to dealers to reduce inventory pile up after a sluggish festive season.
As per data released by industry body SIAM, passenger vehicle sales fell 0.43% to more than 2.38 lakh units, while those of commercial vehicles and two-wheelers declined 7.80% to 75,984 units and 2.23% to more than 12.59 lakh units, respectively.
Requiring correction
“As festive season selling did not happen this year (2018) around, stocks at dealer level went up considerably. It required a correction, so automakers made adjustments in this regard during December,” SIAM president Rajan Wadhera said.
Additionally, factors such as lack of finance and credit options due to the ongoing NBFC crisis, coupled with high fuel prices impacted consumer sentiments, leading to slower sales, he added.
However, the industry body expects sales to pick up in the last quarter of 2018-19.
Mr Wadhera added that in 2019-20, the demand is likely to pick up driven mainly by pre-buying of BS IV vehicles, before the BSVI kicks in.
Going forward, the industry body expects the automobile industry to face challenges due to political uncertainty, subdued consumer sentiments, trade wars and steel prices moving up amid apprehensions over steel import restriction.
On the impact of curbs on use of imported steel by domestic manufacturers, Mr. Wadhera said the decision may impact production and the industry body would be approaching the government to sort this out. The automakers had asked for a year’s time to comply with the new norms — aimed at enhancing local steel manufacturing, that come into effect from February onwards.
Mr Wadhera said nearly 90% of the steel used in automobile production is manufactured in India and only around 10% of high grade steel is imported “as there is no economy of scale to manufacture these in India. We are talking to the government to resolve the issue.”
SIAM will also be reaching out to the GST Council for lowering tax rates.
Mr Wadhera said the automobile prices will go up once the new crash norms as well as higher emission norms are implemented. “…this is almost going to [make automobiles] unaffordable with the high tax rate. …Commercial vehicles move goods, move people… motorcycle is used for private transport and all this is will become very expensive… These are not ‘sin products,’ these are requirements of daily mass movement.
“Hence, there is a strong need that this gets rationalised in the light of cost build up that is going to happen.”
As per the data released on Monday, domestic car sales fell 2% to over 1.55 lakh units and those of UVs were down 2.33% to 65,506 units. In the April-December period, passenger vehicles segment (which includes cars, vans and UVs) grew 4.4%, with the industry body expecting to end the year at about 5% growth for the segment if the last quarter goes well. SIAM had previously forecast a high single digit growth for the PV segment this year.
In two-wheelers, while motorcycle sales last month rose marginally to over 7.93 lakh units, scooter sales declined by 6% to over four lakh units. Two-wheeler sales grew 9.6% in April-December period. and is expected to end the fiscal with double digit growth.
