The year 2018 has not been a very good year for car companies. The sales hasn’t picked up during the generally buoyant festive season of Navratras and Diwali this year.
The reason for sluggish sales has been attributed to rising fuel prices, increase in insurance costs (new car owners need to mandatorily take up 3 year insurance for their cars) and decline in auto loans due to funds crunch with NBFCs.
All these have cumulatively led to a paltry 0.4% growth in passenger car sales in Oct 18 Vs Oct17 and 4% growth in an otherwise bullish SUV segment in the same period. The lull in the market has hit all the car makers alike with market leader Maruti Suzuki which sells 1 out of 2 cars in the country got the major hit.
As per SIAM(Society of Indian Automobile Manufacturers) the passenger vehicle sales in Oct 18 were 1,85,400 vs 1,84,706 in Oct17.
Car sales numbers are calculated basis the primary sales done to dealers. With the decline in car sales, the dealers are saddled with huge pileup of inventories which they now need to get rid off or else they will have to battle issues of carrying their inventories into next year which will be even more difficult as year change will further lead to downgrade of cars’ residual value.
The car companies are sweetening the deals with attractive car prices, discounts with & without car exchanges, even post Diwali in order to ease the pressure from dealers and also keep the sales from dropping down.