Continuing the recent downturn in fortunes of major car companies in India, May 2019 was another negative month for car sales. Rising fuel and financing costs, common base effect, being seen as depreciating assets with liquidity challenges and the continual growth of ride-hailing platforms like Ola and Uber are some of the reasons which are affecting the sales of automobiles. The general elections being conducted over the month in India is being seen as another reason for a further downturn in sales of some of the most popular car brands in India in May.
On 1st June, Maruti, the largest automobile company in India in terms of market share, announced that the overall sales of the company had gone down by 22%. This figure also includes the sales made to its Original Equipment Manufacturers (OEMs). 134,641 units were sold by Maruti in May 2019, as compared to the 172,512 units sold in May 2018. Out of this, 125,552 units were sold domestically, which represents a drop of 23.1% in the domestic markets from the corresponding month in the previous year. Maruti’s exports also suffered, with a decrease of about 2.4% i.e. 9089 units as compared to 9312 units in May last year.
Maruti is not the only one hit by hard the slowdown in sales in the automobile industry. Tata Motors disclosed a reduction of 26% in domestic sales, with 40,155 units being sold in May 2019 as compared to the 54,290 units being sold in the same duration in FY 2018-19. In an official statement, the company stated, “The company’s sales from exports in May 2019 was at 1,563 units, lower by 58 percent over last May. Several factors like a drop in retail in Bangladesh and Nepal, high stocks in the SAARC region and slump in the Middle East have affected the overall industry volumes in these markets.”
Another Indian automobile company to experience a drop in the sales is Mahindra & Mahindra, with an overall drop of 3% taking the sales figures to 45,421 units, from a total of 46,848 units being sold a year ago. When asked about the sales performance of the company, Rajan Wadhera, President, Automotive Sector said, “While consumer sentiment and demand continued to be subdued during the pre-election phase, our focus has been on correcting the channel inventory.” However, he seemed optimistic about the auto sales picking up, “Now, with a stable government at the center and the forecast of a near-normal monsoon, we hope to see an improvement in consumer sentiment over the next few months.
Sridhar V. Partner at Grant Thorton India, says “Slowdown across the industry has impacted passenger car sales coupled with the impasse due to the election, stress on financing and high base numbers.