Following the news that India’s domestic automotive sales continue to decline in February 2020;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“The Indian automotive industry showed no sign of recovery in February 2020 as the year-on-year (YoY) domestic sales volume across passenger vehicles, commercial vehicles and two-wheelers segments continued to decline by 3.65%. According to the data from the Society of Indian Automobile Manufacturers, the top original equipment manufacturers (OEMs), including Maruti Suzuki, Hyundai and Mahindra and Mahindra witnessed a decline of 3.6%, 7.2% and 42%, respectively, in their YoY overall vehicle sales. 

“The prolonged economic slowdown, BS-VI transition, increasing cost of vehicle ownership and supply chain disruptions due to the outbreak of coronavirus (Covid-19) are some of the key factors that hampered the passenger vehicle sales. The Union Budget 2020 also failed to include measures or announcements that could have elevated sales as well as sentiments. The recent price hikes announced by some OEMs have also impacted the sales as the costs have gone up between 2 to 5%.

“Due to the BS-VI transition, customers are postponing their purchase decisions as they are either looking for BS-VI compliant and new models or are awaiting discounts from OEMs and dealers in order to clear BS-IV inventory.

“In March 2020, the domestic sales of passenger vehicles is expected to be flat or at the best, there would be a nominal increase in volumes. Even though there are some key new and facelift models, including Hyundai Creta, Honda City and VW T-Roc, scheduled for launch in March, any improvement in sales is likely to be witnessed only in late March and following months. While some customers are expecting huge discounts in March on BS-IV inventory, it is unlikely that the sales will increase significantly. Unlike previous similar transitions, the BS-IV inventory levels with OEMs and dealers are low due to measures put in by OEMs since late 2019. If the proposed vehicle scrappage policy is cleared by the cabinet, depending on the structure of the policy, it would help in boosting sales in the coming months.”