NEW DELHI -- Indian automakers at a recent car expo near New Delhi expressed cautious optimism that sales will pick up in the second half of the year after bottoming out last year.
But few executives at Auto Expo 2020 said they expected sales to return to 2018 levels, when over 4.4 million units were sold.
Last year was a particularly bad year for car sales, which fell 13% year on year to 3.8 million units, in part due to a credit squeeze. Hundreds of thousands of workers lost jobs at auto plants and dealerships.
"Sales have been weak since January 2019," Kenichi Ayukawa, president of Maruti Suzuki India, which controls about half of the country's passenger car market, told the Nikkei Asian Review. "It will take time [to get back to high growth], and sales will increase only gradually."
He said the Indian subsidiary of Japan's Suzuki Motor "must increase sales in 2020 from 2019 and hope for them to improve."
India is due to introduce new and tighter emissions regulations, known as Bharat Standards 6, in April. Experts believe that auto sales may surge temporarily as manufacturers discount heavily to clear their stocks of vehicles that would not meet the new regulations. As such, they believe that true demand for cars in India can only be seen after the new rules have bedded in.
Guenter Butschek, CEO and managing director of India's third-largest car manufacturer Tata Motors, was also cautious about the sales outlook this year, saying that he expects to see signs of a strong recovery only in the latter half of the year at the earliest.
"We need to master the transition from BS4 to BS6. We need to educate customers on new technologies ... and if we do our homework well in the first half of the [next fiscal] year [starting in April], I think the automotive industry in India should be back in strong growth as of the second half of the coming fiscal year," he told Nikkei.
Rajan Wadhera, president of fourth-ranked Mahindra and Mahindra and head of the Society of the Indian Automobile Manufacturers, said a recovery in the sales of commercial vehicles was more likely than in passenger cars. He pointed to the government's focus on agriculture and rural infrastructure in the recent budget as a reason to expect a pickup in the sales of commercial vehicles.
Yet, Fitch Solutions Macro Research said on Tuesday "the government's 2020 budget failed to provide sufficient short-term supporting policies for the industry." As such, it expects weakness in vehicle sales to persist and sales in the country to contract by 6.7% in the next fiscal year.
Despite such uncertainty, Chinese automakers still see India as a growth market against a backdrop of falling auto sales in their home country due to an economic slowdown and increasing pessimism about the world's biggest auto market in the wake of the coronavirus outbreak.
MG Motor, a unit of SAIC Motor, showcased its newly launched ZS electric vehicle at the Delhi event, claiming that the vehicle was India's first electric SUV. Rajiv Chaba, president and managing director of MG Motor India, said the company aimed to introduce more electric vehicles to India and develop new technologies in the sector.
Great Wall Motor, which made its first appearance at the expo, said it plans to invest about 70 billion rupees ($980 million) in India and employ 3,000 people in phases.
"India has become one of the world's fastest growing major economies, and the auto market is promising, making it a preferred investment destination for most auto companies," said Hardeep Singh Brar, director of sales and marketing.