Auto Sales Could Recover After A Slowdown Period

Though volumes have been subdued in January, sales are likely to recover this month owing to strong retail sales.

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The budget announcement could aid the sales of small cars, commuter motorcycles and scooters

Highlights

  • Auto sales have remained under pressure for last three months.
  • However, retail sales have gone up in January according to FADA.
  • The budget announcement could aid the sales of small cars and motorcycles

January was not a strong sales month for automakers in India and neither it was expected to be. The retail volumes were subdued in December 2018 which led to inventory build-up at dealerships and in-turn the wholesale was down in January 2019. The overall sales of Passenger Vehicles have witnessed a decline of 1.87 per cent in January 2019 with 280,125 units sold against 285,467 units in the same month last year. Even two-wheelers sales were down by 5.18 per cent at 15,97,572 units against 16,84,761 units. Moreover, the auto market in India had witnessed a slowdown in the last three months and even the festive season sales weren't strong enough owing to various macro-economic disruptions.

Segment January 2018 January 2019 Growth
Passenger Cars 184,264 179,389 -2.65 %
Utility Vehicles 85,840 82,772 -3.57 %
Vans 15,363 17,964 16.93 %
Total 285,467 280,125 -1.87 %

Also Read: Passenger Vehicles Retail Sales Posts Positive Growth In January 2019: FADA

However, the situation is likely to improve moving ahead as automakers are expected to recover wholesale volumes this month. This can be substantiated by the data released by the Federation Of Automotive Dealers Associations (FADA) which states that Month on Month (MoM) retail sales of passenger vehicles have grown by 33.97 per cent in January 2019 at 271,395 units against 202,585 units sold in December 2018. According to FADA, sales have taken the fast lane after automakers have rolled out year-end clearance offers to clear the 2018 manufactured models. At present, inventory of PVs at dealerships will last for 30 to 45 days on an average and two-wheeler dealers have inventories of 50 to 60 days in their dockyard. Expectations have also built-up after the budget announcement to exempt individuals with an annual income of up to ₹ 5 lakh which could give a fillip to the sales of entry-level models along with commuter motorcycles and scooters as their personal disposable income will increase. The government has also allotted ₹ 19,000 crore for the road development in rural areas which could also aid two-wheeler sales.

Segment January 2018 January 2019 Growth
Scooters 553,695 497,169 -10.21 %
Motorcycles 10,54,757 10,27,810 -2.55 %
Mopeds 76,309 72,593 -4.87 %
Total 16,84,761 15,97,572 -5.18 %
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Sales of passenger cars in the domestic market were down by 2.65 per cent at 179,389 units sold in January 2019 against 184,264 units in the same month last year. In the same month, the Utility Vehicle segment witnessed a slump of 3.57 per cent selling 82,772 units against 85,840 units which were sold in January last year, while the vans segment grew by 16.93 per cent at 17,964 units against 15,363 units sold in January 2018. In the two-wheeler segment, motorcycle sales have gone down by 2.55 per cent at 10,27,810 units against 10,54,757 units and scooters have de-grown by 10.21 per cent at 497,169 units against 553,695 units. In the same month, sales of mopeds have decreased by 4.87 per cent at 72,593 units against 76,309 units in January last year.

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