Indian car sales down 7% in March 2018, the latest figures show
The Indian car industry is facing a downturn in the second half of the year due to a combination of factors.
As of March 2018 the Indian car market is witnessing a decline in the total number of sales as compared to the same period last year.
The industry’s gross sales have declined by a whopping 70.3% year-on-year to a seasonally adjusted annualized annual rate of 5,719.3 lakh units, according to the latest data from the Indian Automobile Manufacturers Association (IAMA).
The industry suffered a massive decline in sales in the year to March 2018 due to several factors, including the prolonged monsoon season and the closure of the Tata Motors factory in Tamil Nadu.
The decline in car sales in 2019 also stemmed from the closure and shutdown of the Nissan plant in Nagpur, as well as the introduction of the Smart City 2025 program in several states.
India’s Automobile Association has already said that the industry is in a slump and will continue to suffer from the downturn.
The IMA has also stated that the sector is experiencing “challenges” in the financial year, which will force it to slow down its efforts.
“We are not optimistic about the coming months as there are several challenges ahead of us, including some of the factors outlined above,” IMA chairman Ravi Shankar said.
While the decline in automobile sales is attributed to various factors, the biggest culprits seem to be the lack of government policies to provide incentives to the industry.
The government had promised incentives to automobile manufacturers and was trying to implement such incentives in March, but the government had only released a shortlist of manufacturers that would receive a cash payment of Rs 10 lakh.
The government had also introduced a special tax rate of up to 10% on the sale of cars that are manufactured in the country.
“The current tax rate is more than double that of other countries, especially in India, which has the highest taxation of any major economy,” a source at the Automobile Regulatory Authority of India (ARAI) told ET.
The lack of incentives and policies that are being implemented have created a “hostile environment for the industry,” the source said.