Worst auto sales decline in 2 decades

Prior to 2019, annual sales fell only twice in 22 years — in 2007 and 2008

With domestic vehicle sales continuing to decline in December by 13%, the auto industry recorded its worst-ever annual sales fall in two decades in 2019, as consumer sentiment remained subdued amid a slowdown in the economy.

According to data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday, in December 2019, the total vehicle wholesales stood at over 14.05 lakh units as against over 16.17 lakh units in the year-ago month. For the full year, vehicle manufacturers sold over 2.3 crore units across categories in 2019, a decline of 13.77% from over 2.67 crore vehicles sold in 2018.

Prior to 2019, the industry had witnessed a decline in annual sales only twice since SIAM started recording the data in 1997 — in 2007 when overall sales declined by 1.44%, and in 2008 when the sales fell 1.11%.

Challenges remain

SIAM president Rajan Wadhera said that while de-growth had been “lesser” in December, some challenges still remained for the industry. “Festive season positivity has not sustained. While we have seen some improvement, the consumer sentiment continues to remain low,” he added. “Economic growth remains an area of concern... the GDP growth forecast does not bear good news for the industry, especially for the commercial vehicles segment, which is clearly linked to it. If the economy grows at 6-7% in the Q1 of next fiscal, CVs should return to growth levels as seen 3-4 quarters back. Besides, low demand from rural areas continues to be a matter of concern,” Mr. Wadhera said.

In December 2019, passenger vehicle sales declined by 1.24% to over 2.35 lakh units, with car sales falling 8.4% to over 1.42 lakh units and those of vans dipping 53.6% to 8,408 units. However, utility vehicle sales grew 30% to 85,252 units. Mr. Wadhera said going forward, he expected UVs to continue growing on the back of new model launches, while car sales may “remain flattish”.

For the full year, PV sales declined by 12.75%, which too is the steepest decline in over two decades, to over 29.62 lakh units.