MUMBAI (NewsRise) -- Passenger vehicle sales in India declined in February amid a deepening economic slowdown. The new coronavirus outbreak in China that disrupted supply chains also caused automakers to lower production of certain models.
Sales of passenger vehicles fell 7.6% to 251,516 units last month, the Society of Indian Automobile Manufacturers, or SIAM, said in a statement on Friday. Cars witnessed an 8.8% decline to 156,285 units, while sales of sport-utility vehicles remained almost unchanged from last year. SIAM's automobile sales are counted as factory dispatches, not retail sales.
Automakers such as Maruti Suzuki India and Tata Motors have been contending with the worst-ever downturn for more than a year amid weakening consumer sentiment. India's economy grew at the slowest pace in six years in October-December as demand shrank and private investments fell.
The slowdown in the sector is set to further aggravate after the coronavirus outbreak in China disrupted the global supply chain, prompting factory shutdowns in many cities and provinces in the mainland. The fast-spreading contagion has triggered lockdowns across the world, including India. Analysts say that the automobile industry may be bracing for another demand shock as people confine themselves to homes.
"The decline in wholesale dispatches is primarily due to economic slowdown and lower production of Euro VI vehicles," said Rajan Wadhera, the president of SIAM. The supply chain disruptions in China is also a concern, which may "impact the production plans for companies going forward," Wadhera said.
Last week, Tata Motors and Mahindra and Mahindra said their supply of parts from China was hit after the virus outbreak. Mahindra said its production and sales volume may decline by 12,000 units in March due to the virus epidemic as well as a fire outbreak at one of its plants.
On Thursday, the Federation of Automobile Dealers' Association said retail sales of vehicles turned positive last month as most dealers focused on liquidating their stocks of vehicles with older fuel efficiency norms. Total retail sales grew 2.6% in February, while sales of passenger vehicles slipped 1.2%.
India is introducing a more stringent pollution norm called BS-VI for automobiles from Apr. 1.
In January, SIAM had warned that the industry is unlikely to see a recovery in sales before the festive season in October because of weak consumer sentiment and high cost of vehicles.
Last week, Maruti Suzuki, the nation's top car maker, reported a 1.1% decline in February sales after it discontinued certain diesel models. Mahindra & Mahindra, the maker of Scorpio and Bolero SUVs, reported a 42% slump in February sales to 32,476 units, while its passenger-vehicles sales plunged 58%.
Tata Motors, India's largest automobile maker by revenue, said its domestic sales slumped 34%, while sales of passenger vehicles shrank 31%.
Domestic sales of trucks and buses slumped 33% to 58,670 units in February. Sales of two-wheelers shrank 20% to about 1.29 million units, the SIAM data showed.
--Dhanya Ann Thoppil