Auto business slowdown makes segment agnostic

Multiple factors like lack of credit, a slowing economy and looming BS-VI norms come together to deal the blow.

Published: 12th July 2019 08:29 AM  |   Last Updated: 12th July 2019 08:29 AM   |  A+A-

Car sales, Vehicle sales

Representational Image (Express Illustration|Tapas Ranjan)

Express News Service

The slump in auto sales is not just limited to passenger vehicles (PVs) but has also reduced demand across all categories. Going by data for the just-concluded June quarter, the drop in PV sales has been the steepest since the third quarter of FY 2001-02 and the overall sales decline of 12.35 per cent across segments was the worst in the last 41 quarters. According to the Society of Indian Automobile Manufacturers (SIAM), the decline in domestic PV sales in the first quarter of 2019-20 was a sharp 23.2 per cent, two-wheeler sales declined by 11.68 per cent, commercial vehicle (CV) sales dropped by 9.53 per cent and three-wheeler sales reduced by 7.35 per cent compared to the first quarter of the previous financial year. 

This is perhaps the first time in over a decade that the automobile sector has witnessed a fall in sales across all categories and SIAM says that there is a need to take precautionary measures to avoid a prolonged slump. The industry has, for quite some time, been asking for relief in the form of a Goods and Services Tax (GST) rate cut to compensate for expenses incurred meeting numerous regulatory norms over recent years.

In the two-wheeler segment, the fall in demand for scooters is twice as worse as the decline of motorcycle sales. In Q1FY20, scooter sales fell by 16.72 per cent at around 15.14 lakh units as against 18.18 lakh units sold in the same period last fiscal, while motorcycle sales declined by 8.76 per cent in the quarter to 33.31 lakh units.

Experts are of the view that the slowdown in the rural economy, which constitutes almost 50 per cent of the two-wheeler market, higher upfront insurance costs that saw two-wheeler prices go up by `5,000 and lack of finance service availability post the NBFC liquidity crisis are the primary reasons for two-wheelers seeing a decline in demand. 

To add to woes, the 11.68 per cent fall in two-wheeler sales in the April-June quarter is the worst since the 15 per cent decline recorded in the third quarter of 2008-09, and the 17 per cent decline in scooter sales is the sharpest since a 35 per cent fall recorded in the fourth quarter of 2000-01, according to  SIAM data.

Meanwhile, sales of CVs dropped 9.53 per cent to 2.08 lakh units in June quarter against 2.30 lakh units in the same period a year ago. Medium and Heavy Commercial Vehicles  (M&HCV) saw the largest decline at 18.63 per cent, with revised axle norms allowing fleet operators to postpone purchases. 

Girish Wagh, president, CV business unit, Tata Motors, said, “Both M&HCV and the SCV segment has been hit by poor consumer sentiments, falling freight rates and difficulty of funding from NBFCs with a respective decline of 19 per cent and 10 per cent. In M&HCVs, the usually afloat tipper segment has also weakened due to the slowdown in infrastructure projects… The progress of monsoon will be a key factor for the revival of demand in certain segments over the next quarter.”

Similarly, demand for three-wheelers fell 7.35 per cent to 1.49 lakh units as against 1.61 lakh units sold in the same period last year. Lack of permits issued to commercially operated autorickshaws has been the primary reason for the decline. Going forward, the industry has placed its hopes on a normal monsoon and an expected rush to buy BS-IV vehicles at discounted prices before new BS-VI emission norms kick in from April 1, 2020. 

Scooter sales hit trough for first time in 18 years

From being one of the fastest growing segments in the Indian automobile sector, scooters sales have hit one of the worst troughs the Indian market has witnessed in nearly two decades. According to data from the Society of Indian Automobile Manufacturers, scooters sales in the first quarter of the financial year 2019-20 fell by a whopping 17 per cent, the sharpest decline recorded since a 35 per cent fall in the fourth quarter of 2000-01. 

For instance, Honda Motorcycle and Scooter India (HMSI), the second largest two-wheeler manufacturer in the country, saw total sales fall 16.58 per cent in June 2019 over June 2018. HMSI, which makes one of the best selling scooters in the domestic market — the Honda Activa — saw its domestic sales fall to just 450,888 units

Stay up to date on all the latest Business news with The New Indian Express App. Download now


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp