India Auto Sales Drop Amid Weak Demand

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India Auto Sales Drop Amid Weak Demand

Domestic automobile sales in India declined nearly 14 percent year-on-year to 23.1 million units in 2019, according to data from the Society of Indian Automobile Manufacturers.

A slow economy and low consumer sentiment affected overall demand in the world’s fourth-largest automobile market in 2019. Last years decline came after firm growth in 2018, when domestic auto sales – including passenger vehicles, commercial vehicles, three-wheelers and two-wheelers – increased about 13 percent to 26.8 million units.

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The rate of decline was not even across all vehicle types. Total passenger car sales fell about 19 percent to 1.8 million units during the year, according to SIAMs Jan. 10 release. The organization represents all major vehicle and vehicular engine manufacturers in India. Sales of vans slumped 25 percent to 157,303 units while utility vehicle sales rose 4.7 percent to 984,801 units.

Total commercial vehicle sales decreased 15 percent to 854,759 units, while three-wheeler sales fell 4.4 percent to 686,944 units during the year. Sales of two-wheelers, the largest segment of Indias automobile market, declined 14 percent to about 18.6 million units.

As a result of weak domestic sales, Indias total automobile production fell about 12 percent to 27.8 million units in 2019 as automakers resorted to production cuts to balance the slowdown. Meanwhile, automobile exports rose 3.7 percent to 4.8 million units for the year.

SIAM, ahead of Indias federal budget announcement on Feb. 1, has urged the federal government to create an incentive-based scrappage policy and to increase budget allocation for internal combustion engine bus procurement by state transport departments amid the current state of the industry.

The industry body has also asked the government to lower the goods and services tax on Bharat Stage VI-compliant vehicles. Increased cost of BS VI [vehicles] may affect demand. Hence, we have also requested government to reduce GST rates for BSVI vehicles effective April 1 from 28 percent to 18 percent, SIAM President Rajan Wadhera said in a statement.

India is scheduled to jump from the existing BS IV automobile emissions standards to BS VI in April in an attempt to accelerate its fight against local air pollution and climate change. BS VI is equivalent to the European Unions Euro 6 standard and will require changes in engine design of vehicles sold in India, thereby increasing their cost. Those new engines will also require more advanced engine oils.

Photo: Andrew Woodley/Alamy

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