Economy

Car market in India continues to move in slow lane: report

Bloomberg Mumbai | Updated on January 17, 2019 Published on January 17, 2019

December 2018 production numbers showed a 1% drop in overall vehicles, falling for a second month

Slower sales and rising unsold inventory led to forced production cuts at OEMs

The dim outlook for India’s automobile sector is likely to continue well into 2019 as unsold vehicles swelled, while new car registrations saw a decline in the October-December quarter, according to a note by Target Investing.

Dealer inventory during October to December 2018 was at an average 552,616 vehicles per month, doubling from 275,522 in the same period a year earlier, Target said in the report.

Registrations for new cars, two-wheelers and three-wheelers declined. Target used registration information collected from regional transport offices in 30 states and territories and data from Society of Indian Automobile Manufacturers, the industry body.

There is a clear consumer demand slowdown as there is a reduction in registrations across the segments, Sameer Kalra, founder of Target Investing in Mumbai, wrote in the report. Original Equipment Manufacturers or OEMs will cut production for a third month in a row, which will cause a big worry for automobile ancillary companies, he wrote.

Highlights from the report:

* October-December dealer inventory of commercial vehicles climbed 98% year-on-year, highest in 11 quarters; for cars, it swelled 68% while unsold stock of two-wheelers climbed 113% year-on-year

* Car registrations were down 11.7%, two-wheelers fell 9.8% and three-wheelers slid 4.3%

* Slower sales and rising unsold inventory led to forced production cuts at OEMs

* December 2018 production numbers showed a 1% drop in overall vehicles, falling for a second month

* A shift to stricter emission norms for vehicles and dealer financing will be two major events that may impact production going forward

Published on January 17, 2019
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