Automobile Sales Decline In Most States In May
Vehicle registrations fell in 22 of the 30 states and union territories in May.
The slowdown in automobile sales since the festive season is showing no signs of abating, with volumes across India posting a decline in May.
Vehicle registrations, a measure of sales, fell in 22 out of 30 states and union territories last month, according to data released by the Federation of Automobile Dealers Associations. The dealers’ lobby, for the first time, put out state-wise numbers to bring in transparency.
Volumes either grew at a slower pace or fell since September last year as higher upfront insurance costs and rising prices of vehicles kept buyers away. Discounts didn’t help, causing the inventory to pile up. Production cuts followed amid fears of an economic slowdown and a liquidity crunch.
Retail sales fell for the second consecutive month in the ongoing financial year, led by poor demand in the key markets of Uttar Pradesh, Maharashtra and Tamil Nadu, according to the registration data. Uttar Pradesh reported a decline of over 20 percent year-on-year in vehicle registrations—the highest among the five states contributing the most to vehicles sales.
“There are many reasons why there is de-growth,” Shashank Srivastava, executive director (marketing and sales) at Maruti Suzuki India Ltd., told BloombergQuint. “There was some uncertainty because of the elections in April and May and sentiments were also dampened by the liquidity issues, especially among non-banking financial companies.”
But these are temporary and there’s no fundamental reason why car sales should come down going ahead, he said.
The top five states that account for over half of the total vehicles sold in the country saw a decline in sales over the previous year. They picked up over April though.
Only eight states reported a year-on-year growth, on a lower base, of which five are from the northeast. Their contribution to overall vehicle registrations is 13.9 percent. Arunachal Pradesh registered the highest growth on a yearly basis in vehicle registrations at 31 percent. Chhattisgarh, Jammu & Kashmir and Rajasthan, too, posted higher sales in all vehicle categories.
Jharkhand, Odisha and West Bengal posted a decline in vehicle registration across all categories compared with the same month last year. West Bengal is the only state where sales declined across all categories both year-on-year as well as over the previous month.
Scooters And Motorcycles
Two-wheeler registrations decreased by nearly 9 percent over the previous year, the most among all categories. Registrations in Uttar Pradesh, Maharashtra and Tamil Nadu—the three biggest two-wheeler markets by number of registrations—declined 22 percent, 6.7 percent and 14 percent, respectively.
Buying in the marriage season and an improvement in liquidity aided two-wheeler sales on a month-on-month basis, Ashish Kale, president of FADA, told BloombergQuint over the phone. Sikkim registered the highest growth in vehicle registration of 67 percent year-on-year, while Haryana witnessed the maximum decline in vehicle registration over last year at 30 percent.
Passenger Vehicles
Only seven out of 30 states and union territories posted a growth in passenger vehicle registrations over last year. Maharashtra—which comprises nearly 13 percent of the nation’s passenger vehicle market—was the only state from the top 3 to post a growth over last year. The growth in vehicles registered was the highest in Chhattisgarh at 36 percent, and the worst in Manipur with a decline of 25 percent.
Trucks
Growth in retail sales of commercial vehicles in the top three states was offset by slowing demand in the north and eastern regions. Registration of commercial vehicles declined 45 percent year-on-year in Jharkhand. In absolute terms, 3,546 fewer commercial vehicles were registered in Bihar in May compared with last year.