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Explained: Car sales fall in September — why the situation is not improving

What started as a problem on account of funding and liquidity squeeze in July-August 2018, has now become more of a sentiment issue with individuals looking to postpone and cut down on consumption expenditure.

Written by Sandeep Singh , Edited by Explained Desk | New Delhi | Updated: October 2, 2019 9:20:04 am
car sales drop, automobile market in india, maruti suzuki car sales drop, indian express news Those within the auto sector say that customers are also postponing their vehicle purchase decision on various accounts including expectations of cut in GST rates.

Sales of vehicles across the automobile sector continued their slide in September with the leading manufacturers of passenger vehicles, two-wheelers, and medium and heavy commercial vehicles reporting a sharp fall in their year on year domestic sales last month.

While Maruti Suzuki India Limited reported a 27 per cent drop in domestic sales of PVs at 1.1 lakh units, Bajaj Auto witnessed a 35 per cent drop in domestic sale of motorcycles at 1.77 lakh units. Ashok Leyland announced the sale of 4,035 units of medium and heavy commercial vehicles in September, which is a 69 per cent decline over its sale of 13,056 units in September 2018.

For Maruti Suzuki, which is the industry leader, the mini and compact vehicle segment witnessed a 29 per cent drop in sale while the mid sized car segment (Ciaz) witnessed a 72.5 per cent decline in sales over the same period last year.

The utility vehicle segment for MSIL stood stable with a marginal decline of 0.5 per cent in sales last month. The company is offering heavy discounts on various vehicles to prop up sales.

Why is the decline continuing?

What started as a problem on account of funding and liquidity squeeze in July-August 2018, has now become more of a sentiment issue with individuals looking to postpone and cut down on consumption expenditure.

With GDP growth rate hitting levels of 5 per cent for the first quarter ended June 2019 and wage growth not keeping pace with expectations, economists and market experts say that people are generally looking to reduce their expenditures and the sentiment has turned low.

Those within the auto sector say that customers are also postponing their vehicle purchase decision on various accounts including expectations of cut in GST rates (till the September 20 meeting), hopes that transition from BSIV to BSVI may lead to big discounts between January and March 2020 and also on expectations of bigger discounts in festive season.

While companies have failed to garner demand despite heavy discounts, many within the industry are sceptical about a revival in sales anytime soon.

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