The domestic automobile industry started the new financial year on the back foot with passenger car sales reporting a 10.15% decline in April, the biggest monthly decline in a year since May 2013.
An overall sluggish economy, high inflation and interest rates have ushered in a prolonged downturn in the industry that has already witnessed two consecutive annual declines. There was hope that a cut in excise duties in February would lead to some growth in the new fiscal but there is no evidence of that yet.
Passenger car sales during the month stood at 1,35,433 units against 1,50,737 units in the same month last year. Most of the major manufacturers registered decline in sales except Hyundai, Honda and Ford, whose sales rose on the back of new launches.
"This is the biggest decline since May 2013, when car sales dropped by 11.7%," said Sugato Sen, deputy director general, Society of Indian Automobile Manufacturers (SIAM). "What is happening is that we are unable to recover from the negative sentiment. We need a trigger to change the sentiment."
The industry is hoping that a change in government could be that trigger.
Policy intervention is urgently required in commercial vehicles sector— a barometer of the overall economy—that has been on continuous downward spiral for the last two years.
"The current rate of 4-5% growth (GDP) is not enough. For a healthy growth of the sector, we need the economy to grow at over 7%," Sen said, adding that the forecast of a deficient monsoon was also a concern.
The only silver lining was provided by the robust sale of two-wheelers that propped up overall automobile sales numbers. Motorcycle sales last month grew by 8.06% to 9,11,908 units while scooter sales grew by over 26% to 3,29,680.