Passenger car manufacturers are facing headwinds in 2018 and the growth rate has slowed down to 6.4% (Jan-Oct 2017 vs 2018), despite some interesting launches like Maruti Swift, Honda Amaze, Mahindra Marazzo, and Hyundai Santro. Automakers would be more cautious for the upcoming year because India will have a general election in 2019, which may have some impact on passenger car sales due to the nervousness in the market, emanating from the formation of the next Government. 2020 will see a much larger impact as vehicle prices will certainly go up due to the implementation of BS6 (Phase-1) emission norms, particularly for diesel engine-powered cars.
Monthly growth rate in 2018 has been slow since the beginning of the year, except for the month of May and June, due to GST base effect. So, we summarized all the factors impacting the consumer sentiments at one place to understand the effect on the growth of passenger car market.
Note : highest monthly price in Delhi is considered as retail fuel price.
Despite nearly all updated product line, India’s largest carmaker Maruti too is struggling in the second half of the year, thus dragging the whole industry growth numbers down.
While temporary factors will go away with time but what is here to stay is a higher interest rate and highly vulnerable retail fuel price. Also, rising input cost and depreciating Rupee is having a direct and indirect impact on the cost of making cars, even for homegrown companies like Tata and Mahindra. This at some point of time may push automakers for price hike, and lead to further worsening of consumer sentiments.
So, all these could lead to the possibility of higher car prices and even higher discounts in future by automakers to keep inventory in check at factory and dealership level and keep the business running at optimum level.