Will Auto Gloom End In 2020?

A lot is riding on the early recovery of Indian automobile sector which is launching diverse models at catchy price points to fight declining sales By Ashish Sinha & Siddharth Shankar

- Ashish Sinha & Siddharth Shankar

As November drew to a close, India’s worst fears came startlingly true. Government data showed the economy had slipped further, with the July-September gross domestic product (GDP) growth slumping to 4.5 per cent, the seventh straight quarter of fall. And nowhere was this deceleration more apparent than in the country’s automobile industry. And justifiably so. After all, the auto sector contributes more than 6.5 per cent to the country’s GDP, and has strong backward linkages with supporting industries like rubber, plastic, auto-components and, of course, steel.

Beginning late last year, all segments including cars, two-wheelers or commercial vehicles have been consistently reporting dipping sales figures month after month. A fallout of this has been job losses at ancillary units and dealerships — 15,000 or more are out of work. There is a visible decline in passenger car sales every month (exception being October). Experts say the sector has virtually been set back by three-four years. Can it recover in 2020? Or will it take longer?

For the seven-month period ended October this fiscal, the car makers collectively have managed to sell 1.54 million units (15,48,486 units). In 2018-19, the car segment clocked total sales of 3.37 million units, the highest ever till date. Experts say if the average monthly sales for the remaining five months (till March 31, 2020) is around 200,000 units, then for FY 20, we will be staring at an estimated total sales of less than 2.6 million units, something the industry achieved in FY15.

To make matters worse, the next four to five months are also expected to be very difficult due to the transition from BS IV to BS VI emission norms. What can the car makers do to reverse the decline? What can the consumers expect in 2020?