Sluggish car sales lead to factory shutdowns

Domestic car sales were down by over 20 per cent in the month of May 2019, forcing a number of carmakers to announce factory shutdowns to clear the unsold dealer inventory. 

Car manufacturers in India are going through a rough phase as passenger vehicle sales slumped down for the second month in a row during May 2019. Car sales in the domestic market registered a dip of over 20 per cent in the last month on a year-on-year basis, with all of the country’s leading car companies posting negative growth in their sales. The slowdown in sales has also forced car manufacturers to announce factory shutdowns that stretch over a week. At the same time, car dealers have taken the worst blow amidst all of this, as they have piled-up unsold inventory from previous months, which is estimated to be over 50 per cent than usual!

If you look at the individual performance of major car companies in the domestic market, it doesn't paint a pretty picture. Maruti Suzuki, the country’s largest car manufacturer, registered a negative growth of 25 per cent in May 2019 as they only managed to sell 1,21,018 units as compared to 1,61,497 units dispatched in May 2018.

Hyundai’s sales were down by 6 per cent – 42,502 units in May’19 vs 45,008 units in May’18. Although the difference is only of around 3,000 odd units, don’t forget that May 2019's sales for Hyundai include new additions like the new Santro and the recently launched Venue compact-SUV. And, combined, they’ve contributed to over 11,900 units in monthly sales in May 2019.

Mahindra registered a growth of 1 per cent in their sales in May 2019, which came courtesy of the strong sales of their new compact-SUV, the Mahindra XUV300 (5,113 units). The manufacturer sold 19,541 units last month as against 19,378 units sold during the corresponding month in 2018.

Tata and Honda’s sales were down by 38 per cent and 28 per cent, respectively. Despite the addition of their new hatchback, the Glanza, Toyota India’s domestic sales were down by 7 per cent in May 2019. German auto major Volkswagen was no better than last year, as their sales were down by 14 per cent. Ford, on the other hand, registered a dip of 30 per cent in their monthly sales last month.

Industry experts, as well as some leading carmakers, believe that it’s unlikely that the scene will improve in the coming months. Customer sentiment is expected to be subdued while the high finance cost, rising fuel prices, and liquidity constraints are also going to deter consumers from buying new cars.

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