Car sales growth may slip to four-year low in FY19 on slow demand

Car sales growth may slip to four-year low in FY19 on slow demand

New Delhi, Nov 12: The pace of car sales growth in the world’s fifth biggest market, India, is set to hit a four-year low of below six per cent in financial year 2018-19 as multiple factors continue to slow down demand. Leading industry researchers including IHS and JATO have revised sales forecast for the Indian market after a lacklustre festive season. The industry had grown by 7.9 per cent in FY18 and 9.2 per cent in FY17. A total of 3.28 million passenger vehicles were sold in domestic market last year.
Based on the data compiled by the industry’s apex body Society of Indian Automobile Manufacturers (SIAM), the domestic passenger vehicle (cars, vans and utility vehicles) market has expanded by 6.1 per cent during the April-October period of FY19. The industry’s growth, measured by dispatches to dealerships, was almost 20 per cent in the April-June quarter of the ongoing fiscal on a low base of previous year when the transition to GST impacted dispatches.
However, the industry volumes declined in each of the three months of the second quarter, bringing the rate of growth down to 6.8 per cent for the first half (April-September). The trend reversed in October but growth remained muted with an increase of just 1.5 per cent YoY, making the festive season one of the dullest for the car makers. The cumulative growth till October softened further to 6.1 per cent.
Ravi Bhatia, president (India), JATO Dynamics said the FY19 growth rate will slip below 6 per cent to at least 5.8 per cent. He said dealers will be cautious of stocking cars after a sluggish festive season and in the run up to the calendar year change. Any unsold car manufactured in a particular calendar year is sold at a high discount. “The lending environment will be under pressure as NBFCs have been hit. The high cost of insurance remains a challenge and overall sentiment boosters are missing,” he said.