Indian Car Market Sees First Yearly Sales Decline Since 2002

J.Emerson
by J.Emerson

For the first time in more than a decade, new car sales in India have failed to post a year-over-year increase. Instead, a sharp drop in sales spells bad news for carmakers with heavy investments in that important developing market.

According to information released by the Society of Indian Automotive Manufacturers and reported by the WSJ, passenger car sales declined by 9.6 percent in 2013 to around 1.8 million units. Total passenger vehicle sales were down 7.2 percent to 2.55 million units. Many factors contributed to the decline, but inflation is the primary culprit. This past year in India saw a slowing of economic growth as prices surged, squeezing the purchasing power of the burgeoning middle class. Besides the spike in new-vehicle prices, the general cost of ownership has also risen. The rollback of government controls on fuel prices has led to higher costs for gasoline. Loan rates have also risen, giving many consumers second thoughts about purchasing a new car. The decline of new car sales illustrates the pitfalls of investing in emerging markets, which demonstrate strong aggregate growth but are often volatile in nature.

Ford, Honda, Hyundai, and Suzuki have all invested heavily in the Indian market in recent years. If growth remains stagnant or declines, it could lead to retrenchment from manufacturers who previously bet big on the emerging economy. Instead of increased domestic sales, manufacturers may turn to exporting. Ford in particular has spent nearly a billion dollars to expand Indian manufacturing capacity in the anticipation of future growth. The introduction of the EcoSport SUV helped lift overall December sales for Ford India, with a 2.84 percent increase over the previous year. But that sales increase came from a nearly 10 percent decline in domestic sales a 22 percent rise in exports. If Ford’s (or any other company’s) plans for Indian domestic growth don’t pan out, it could lead to all kinds of interesting arrangements in an attempt to maximize sunk capital investments. Indian-built EcoSport for the American market, anyone?

J.Emerson
J.Emerson

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  • Goacom Goacom on Jan 12, 2014

    In general, most servicing and support is done at car dealerships. Most of VW's dealers are in the major metro areas. VW/Skoda just have around 4% of the Indian car market. Over 40% remains with Maruti/Suzuki. Their cars are more basic (except for their Fiat sourced DI Turbo diesels). However, they have an extensive support network and are known for their excellent customer service. The Hindustan Ambassador could often be serviced at independent shops as it was quite primitive, but its market presence is quite irrelevant now (

  • Trail Rated Trail Rated on Jan 13, 2014

    "What are the tax rates on a new vehicle in India?" Road Taxes vary by state over price slabs and in some states even the type of fuel. eliteford.co.in/ford_ecosport.htm Ex-Showroom Price: INR 568,937 or USD 9176 State Road Tax: INR 96,665 USD 1560 For the basic diesel, it is USD 10982 and USD 1840. Ex-showroom = Ex-factory + Excise (12% to 27%) + VAT In some cases, a vehicle that costs USD 16,000 can retail for USD 30600. "The best selling car in India has been the old BMC based Morris Oxford" Sales till the 80s were not out of choice. The Ambassador now sells less than 150 a month. "I’m curious about the shop and repair infrastructure." Except some Tata dealers, almost every dealer has top-notch workshop facilities even in small towns. Since independent mechanics don't have an education or certification and don't provide any guarantees, nobody trusts them, except maybe some taxi operators trying to cut costs with cheaper spares. Skoda and VW has brought this upon themselves by all the dealer horror stories. team-bhp.com/forum/indian-car-scene/55796-team-bhp-stands-truth-but-skoda-wants-instigate-team-bhp-its-users.html "That car is in no other market wanted and because it is only wanted in India it is also developed in India." If that was the plan, it doesn't seem to be working. http://www.team-bhp.com/forum/indian-car-scene/146436-december-2013-indian-car-sales-figures-analysis.html Most of the top 10 best sellers were probably designed in Japan with the exception of the Hyundai i10 from Germany and the Bolero and the Swift Dzire from India. In 1971, there were 1.8 million registered vehicles on the road. That number went up to 89.6 million by 2006. Parts of India are still stuck in the 70s, I shudder at the thought of the environmental impact when they seek to live and drive like the rest of the world.

  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
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