Prospective car buyers interact with a sales manager at a car showroom in Mumbai. Photo: AFP

When India’s automotive sales started slowing down early this year many industry experts expressed hopes that the festival season would come to the rescue, boosting the sagging sales graph and making up for the shortfall.

Now that the festival season has kicked in with the Ganesh Chaturthi festival on September 2, which is celebrated in western parts of India, including the country’s commercial capital Mumbai, automobile dealers are not expecting any significant sales growth as against last year.

Most of them are resigning themselves to flat or marginal growth for the second successive year. Last year, automobile manufacturing companies experienced poor festival season sales blamed on the bankruptcy of India’s largest shadow banker, IL&FS, and the lack of liquidity in the banking system.

Sales of automobiles during the festival months typically comprise almost a third of the total vehicles sold during a particular year. The festival season spans the months of September and October with the celebration of different festivals in various part of the country. Festival season sales climax during Diwali with numerous discounts across all products ranging from textiles to cars. (Those discounts often are extended to Christmas and New Year.) 

However, this year the dealers’ expectation is muted as passenger vehicle manufacturers Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd and others reported a double-digit fall in wholesale dispatches to dealerships in July and August.

The fall is even more steep in the sales of medium and heavy-duty commercial vehicles, excluding buses, as transporters deferred purchases owing to excess capacity caused by the slowing economy and the consumption slowdown. In the month of August it crashed by almost 60%, according to the monthly sales data released by truck makers.

The overall volume at India’s top four commercial vehicle makers — Tata Motors, Ashok Leyland, Volvo Eicher and Mahindra & Mahindra — fell 59.5% to 31,067 units during the month, compared with the year-ago period. In desperation, truck makers are now offering discounts.

In the two-wheeler segment, major players such as Hero MotoCorp, Bajaj Auto and Royal Enfield registered a decline in sales. While Hero MotoCorp saw a decline of 20.6%, for Bajaj it was 21% and for Royal Enfield, the drop was 24%.

One of the most important reasons behind the slowdown had been the lack of credit options available to both customers and dealers from banks and shadow bankers, as financial institutions tightened their respective credit requirements.

The Federation of Automobile Dealers Associations is hoping the Goods and Services Tax Council will decide to reduce the rate of taxes levied on passenger vehicles, a move the group hopes will generate some demand in the coming months. The auto sector currently is assessed the highest base tax rate of 28%.

Indian Finance Minister Nirmala Sitharaman has said that the government will take a proposal to reduce the goods and services tax rate on automobiles to the council, which will be meeting on September 20.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Join the Conversation

16 Comments

  1. I was recommended this web site by my cousin. I am not sure whether this post is written by him as no one else know such detailed about my difficulty.

    You are amazing! Thanks!

  2. Nice post. I used to be checking continuously this weblog and I am impressed!
    Very useful info specifically the last phase :
    ) I care for such info a lot. I was seeking this particular information for a long time.
    Thanks and best of luck.

  3. Hmm it looks like your website ate my first comment (it was extremely long) so
    I guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog.

    I too am an aspiring blog writer but I’m still new
    to everything. Do you have any points for rookie blog writers?
    I’d really appreciate it.

  4. I simply couldn’t go away your website before suggesting
    that I really loved the standard info a person provide for your visitors?
    Is going to be again frequently in order to inspect new posts

  5. Hello! Do you use Twitter? I’d like to follow you if
    that would be okay. I’m absolutely enjoying your blog and look forward to new posts.

  6. Normally I don’t read post on blogs, but I wish to say that this write-up very forced me to
    take a look at and do it! Your writing taste
    has been amazed me. Thanks, quite nice article.

  7. My partner and I absolutely love your blog and find many of your post’s to be
    exactly I’m looking for. Would you offer guest writers to write content for you personally?
    I wouldn’t mind producing a post or elaborating
    on a lot of the subjects you write regarding here. Again, awesome weblog!

  8. You’ve made some really good points there. I looked on the internet for more information about the issue and
    found most individuals will go along with your views on this web site.

  9. Por exemplo, o e-mail marketing pode ser uma grande oportunidade para se manter em contato com seus clientes. Confira este artigo para encontrar maneiras mais poderosas de realmente tornar seus métodos mais sensíveis às necessidades de sua base de clientes.

Leave a comment

Your email address will not be published. Required fields are marked *