India's April Auto Sales Slows Down For 5th Consecutive Month

India's automobile sector continued its bumpy ride for the fifth consecutive month in April with 20 percent drop in car sales and 16 percent drop in two-wheeler sales, compared with the same period last year

MUMBAI, (UrduPoint / Pakistan Point News - 14th May, 2019 ) : India's automobile sector continued its bumpy ride for the fifth consecutive month in April with 20 percent drop in car sales and 16 percent drop in two-wheeler sales, compared with the same period last year.

"The not-so-happy news continues," said Vishnu Mathur, director general of Society of Indian Automobile Manufacturers.

Sales of car and sports utility vehicle have touched a new low since October 2011.

Passenger Vehicles sales declined by 17.07 percent in April over the same month last year. Among the passenger Vehicles, the sales of passenger cars, utility vehicles and vans decreased by 19.93 percent, 6.67 percent and 30.11 percent year-on-year respectively.

The drastic drop in sales was attributed to several factors including liquidity squeeze in the market, rising fuel cost, interest rates and insurance costs that has dampened consumer sentiment.

"In October, overall auto sales grew by 1.55 percent, but again retreated to negative territory after that," Mathur said.

"We expect slowdown to continue, as rural demand is not picking up due to liquidity crisis in NBFC space and higher monsoon deficit in several parts of the country," said Mitul Shah, auto analyst at Reliance Securities, a stock brokerage house.

After inventory de-stocking, existing inventory continues to remain at higher-than-normal level for most players. Therefore, it would continue to impact the wholesale dispatches to some extent in May and June as well, Shah said.

"Discretionary spends (by consumers) are being held up. Maybe things will improve after the election results are over and a stable government is formed. We expect things to get better in the second half," Mathur said