- Indian Auto Industry is facing some of the worst times seeing the worst sales drop in the last two decades. The passenger vehicles have faced the worst hit among all the segments.
- According to data released by Society of Indian Automobile Manufacturers (SIAM), in the period of April-June, the vehicle sales across all categories declined by 12.35 percent to 60,85,406 units against 69,42,742 units in the same period last year.
Indian Automobile Industry is facing some of the worst times seeing the worst sales drop in the last two decades. The passenger vehicles have faced the worst hit among all the segments. According to data released by Society of Indian Automobile Manufacturers (SIAM), in the period of April-June, the vehicle sales across all categories declined by 12.35 percent to 60,85,406 units against 69,42,742 units in the same period last year.
On the other hand, the passenger vehicles declined by 18.42 percent to 7,12,620 units compared with 8,73,490 units in the year-ago period, while the domestic car sales reduced by 24.97 percent to 1,39,628 units as against 1,83,885 units in June 2018.
Let’s look at the reasons for negative buyer sentiments-
- One of the major reasons is the confusion created by the upcoming BS-VI emission norms which will be applicable from 1st April 2020. The norm has left confused people whether to buy a car now or to wait until the new cars with BS-VI engines arrive.
- Easy availability of ride-hailing apps and smart mobility solutions such as Ola and Uber.
- Liquidity crunch in the non-banking financial institutions and high-interest rates on bank loans.
- High Fuel Prices.
According to Nikunj Sanghi, president of the Automotive Skill Development Council and past president of the Federation of Automotive Dealers Associations (FADA) “A person would need a vehicle, but he is prepared to wait. The purchasing power of people is in terrible shape.”
Launch of MG Motor and Kia Motors in India came as a wave of fresh air during the dying, pessimistic and double-digit negative growth witnessed by the auto industry. Both the vehicle manufacturers decided to enter India at a time when the market trend predicted a hard time for them, but they have proved their credibility by witnessing record bookings.
The 96-year old British brand, MG Motor and now owned by China’s biggest automobile conglomerate SAIC launched the Hector SUV in India as the ‘India’s First Internet Car’ and has recorded a number of 21,000 bookings within a month of launch. This urged MG to shut bookings temporarily to meet the production capacity.
The 8th largest automaker in the world, Kia Motors and a known South Korean brand, announced the opening of booking on 16th July 2019 and witnessed an industry record of 6,046 units booked within 24 hours, which means more than 250 units were booked per hour.
Hyundai, the second-largest automaker also analyzed the market requirement and launched India’s first connected car- Venue which almost toppled the segment leader Maruti Suzuki Vitara Brezza in the June 2019 sales.
These numbers are a statement that the Indian auto industry has matured exponentially in the past couple of years and buyers no longer prefer tried and trusted the brand, but they are willing to experiment more given the car meets the global standards.
Given the changing trends in the industry, traditional automakers such as Honda, Maruti Suzuki, and other brands need to have a good look at their product strategy to control the market.