(Adds details, comments from industry body executive)
By Aditi Shah
NEW DELHI, May 13 (Reuters) – Wholesale sales of passenger vehicles in India fell 17% year-on-year in April, their steepest decline since October 2011, data from the country’s auto industry body showed on Monday, as weak consumer confidence and a liquidity crunch hit demand.
Sales of passenger vehicles to car dealers dived to 247,541 in April from 298,504 a year earlier, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of motorbikes and scooters dropped 16.4% to about 1.6 million.
Retail sales of passenger vehicles fell 1.28% in April, according to SIAM.
“The sentiment in the market has not been good,” said Vishnu Mathur, director general at SIAM, adding a recent funding crisis at shadow – or alternative – banks had lowered liquidity for dealers and car buyers, and a rise in car insurance costs had also hurt sales.
The fall in car sales comes amid a general slide in demand for consumer goods in what is seen as a major sign of an economic slowdown during the tail end of Indian Prime Minister Narendra Modi’s tenure. The drop in demand is also at odds with the government’s stated GDP growth rate of 7%.
Modi is seeking a second term in a general election for which voting is underway and results are expected on May 23.
Wholesale sales of passenger vehicles have been slowing since November and inventories at carmakers have been rising, leading some to cut production.
Maruti Suzuki Ltd, India’s biggest carmaker which accounts for about half the market, cut production by 10% in April from a year ago, following sharp declines in February and March output as well. Maruti’s wholesale sales of passenger vehicles fell 20% in April and last month it forecast a weak rate of growth for the current fiscal year.
Most other carmakers, including Toyota Motor Corp, Ford Motor Co and Mahindra & Mahindra, also cut production in April.
“The production cuts have been effected by companies to correct inventories, the process is still on,” said Mathur.
“The negative sentiment will take some time to evaporate,” he said, adding demand was likely to come back in the second half of 2019 once a government was elected and inventory levels have come down. (Reporting by Aditi Shah in New Delhi and Chris Thomas in Bengaluru, Editing by Sherry Jacob-Phillips and Mark Potter)