Latest figures from the Society of Indian Automobile Manufacturers (SIAM) show that passenger vehicle sales have fallen 13.2% in the seven months to July, and almost 31% in July alone, compared to the same month last year.
It’s the biggest such fall in 20 years, with a number of factors coming together to create a perfect storm.
“The cost of acquiring vehicles has gone up sharply the past year,” Maruti Suzuki chairman RC Bhargava told the Economic Times.
“Regulations on safety have come in along with those on higher emission norms, raising vehicle prices,” he explained. “Insurance costs have risen, some states have levied additional taxes,” he added.
And then there is the reduced availability of financing – a consequence of a crisis in the shadow banking sector which had supplied around 40% of new car loans.
Some observers have also suggested consumers are delaying purchases, either hoping to pick up a heavily discounted BS-IV vehicle before new BS-VI emissions standards kick in next year or in the belief that low-cost electric cars will soon be on offer.
While the market traditionally picks up after the monsoon, any recovery is unlikely to offset the slump seen in the first seven months of the year and leading carmakers are calling for government assistance, in the form of tax cuts or reduced registration fees.
The Jeep brand sits in the SUV segment, which Rahul Pansare, Head Marketing Communications & PR, FCA India Automobiles, called “the most attractive segment for all automobile manufacturers” – and he appears less concerned than executives in the mass market segment.
“With a good monsoon and the festive season ahead, I am optimistic that the market will get back to normal soon,” he told Exchange4Media.
“There’s a lot happening between brands and customers,” he noted. “Today the auto customer is well researched and knows how to make the right choice. He is not ready to compromise when it comes to comfort and safety for his loved ones.
“Brand trust has become an integral part of the purchase decision,” he added, “In today’s scenario, apart from staying true to the core brand values, brands must deliver what they promise.”
Sourced from Economic Times, Exchange4Media; additional content by WARC staff