Car Sales Slow Down in FY19, But the Road Ahead Looks Worse

Rising insurance premiums, switch to shared mobility and poor demand from rural India have led to the slowdown.

It hasn’t been a good year for passenger car sales in the country, but that’s not all. It’s likely to get worse according to data from the Society of Indian Automobile Manufacturers (SIAM). The passenger car market grew just 2.7 percent in the entire financial year from April 2018 to March this year.

SIAM predicts that the year ahead will also see passenger car sales grow between 3 to 5 percent and two wheeler sales growing by only 5 to 7 percent. This is a far cry from the double digit growth the industry was used to a few years ago.

The reason behind this crunch, according to SIAM, was a slowdown in private car purchases because of shared mobility (read Ola & Uber type services), an increase in third party insurance premium and poor demand from the tier 2 cities and rural India owing to lower income from agriculture. An increase in raw material prices also forced most car makers to hike prices, affecting sales.

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Who Gained, Who Lost?

While most car makers have had a slow year, it was Maruti Suzuki that managed to maintain its lead in the market. It grew 5.25 percent year on year, selling a total of 17.3 lakh cars in the year, taking its market share to 51 percent. The top six cars by sales volume are all Maruti Suzuki vehicles such as the Alto, Swift, Dzire, Baleno, WagonR and Vitara Brezza.

In a distant second spot was Hyundai, India’s second-largest car maker, selling 5.45 lakh cars in the year, an increase of only 1.6 percent from the previous year. Mahindra also got a boost with new launches such as the XUV300 and Marazzo helping its case, growing 2.2 percent year on year.

But more than Mahindra, Tata seems set for strong growth, with a 10 percent increase year on year, selling 2.31 lakh vehicles, buoyed by the success of its Tata Tiago, Nexon and newly launched Harrier.

Honda, Toyota and Ford were the other three gainers, whose sales increased marginally. However, the year was fairly bleak for others. Renault dropped about 22 percent in sales, while Nissan saw a 31 percent drop in numbers to just 36,500 cars being sold in the year. Volkswagen, Skoda, Jeep and Fiat were among the others who lost sales volumes and market share in the past year.