Falling four times in a row on a month-to-month basis, the domestic passenger car market showed no signs of revival in February. According to latest figures released by the Society of Indian Automobile Manufacturers (SIAM) on Friday, sales of passenger cars—the largest segment by volumes—dropped 4.33% to 171,372 units in February this year from 179,122 units in the same period last year.

Overall, the passenger vehicle segment—including cars, utility vehicles, and vans—fell 1.11% to 272,284 units in February this year from 275,346 in the same month last year.

SIAM said that uncertainty ahead of elections coupled with weak market sentiment and unfavourable factors like high interest rates and insurance costs are some of the reasons affecting sales. SIAM estimates that the year will end with around 3% growth—missing even its scaled-down forecast of 6% in the beginning of the fiscal.

“The sales decline in February is the seventh instance in the last eight months, with the only positive growth since July last year coming in October,” Vishnu Mathur, director general, SIAM, said. In October, the industry had shown slight signs of revival owing to the festive season.

"What we are seeing is that the market sentiment is subdued. Interest rates are still high and we have not been able to recover from the impact we have had earlier in the year. With people postponing discretionary spends like buying cars ahead of the elections, coupled with the current subdued sentiments, it is unlikely that march sales will be high,” he said.

Along with passenger cars, India’s second largest segment by volumes, two-wheelers, also took a huge hit, sliding 4.22% to 1,615,071 units from 1,686,180 in the year-ago period.

Even commercial vehicles (including light, and medium, and heavy vehicles) faced a slight dip of 0.43% with its domestic sales falling to 87,436 units in February 2019 from 87,815 in the same period in 2018.

Total production fell 1.53% to 2,475,110 units this year. However, total exports have been growing both on a month-on-month and year-on-year (yoy) basis. In January this year, total number of exports grew by 1.31%, while in February; the number jumped 4.16% yoy.

In its third quarter review of the Indian automobile industry, SIAM said that some of the key growth drivers for the auto industry will be the government’s continued focus on agri- and rural development and pre-buy of Bharat Stage IV (BS-IV) vehicles in FY20 before BS-VI implementation.

SIAM also said that global factors like slowing world economy (China and EU) and ongoing trade wars will pose a major challenge to India’s auto industry.

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