India’s car buyers remain cautious despite pre-election tax cut

Consumer demand

SHARE THIS STORY

India autos Mar14Its pre-election time in India, as the world’s largest democracy prepares to go to the polls next month.  And so auto sales are receiving special attention from the politicians in advance of the vote.

Thus the Finance Minister cut taxes last month on all models, to 8% from 12% for small cars, 2-wheelers and commercial vehicles; to 20% from 24% for mid-sized cars; and to 24% for large cars and SUVs from 27% and 30% respectively.  But as the chart above of monthly sales shows, buyers didn’t rush to showrooms to celebrate:

  • February sales were almost exactly the same at 213k (red square) versus February 2013 (green line)
  • Year to date sales in 2014 are thus down 4% versus 2013

But of course March is always the strongest month for sales, and the government’s timing was clearly aimed at developing a feel-good factor then in advance of the election itself.

Detailed data from analysts BHP shows that the main effect of the tax cut was in the sedan and MPV segments.  Honda in particular did well, jumping to 4th in the manufacturers’ league table from 8th last year.  Its City sedan model outsold the combined sales of its competitors, as it focused on moving volume from its new Rajasthan plant.

Ford’s EcoSport sales were also strong, with an order backlog building as it began sales into export markets.

But the key issue remains what will happen after the election.  Auto sales fell last year for the first time in a decade.   And with economic growth slowing, it may be sometime before 2010’s ‘Incredible India’ advertising campaign resurfaces.

PREVIOUS POST

5 years of stimulus have only delayed move to the New Normal

12/03/2014

Coincidentally the blog began its 6-monthly review of global financial market pe...

Learn more
NEXT POST

Crimea referendum highlights growing geo-political risks

14/03/2014

Markets have been remarkably calm ahead of Crimea’s planned Sunday referen...

Learn more
More posts
Plastics producers need to move to recycled feedstocks as Western refineries start to close
21/11/2021

Plastics producers are now being squeezed from both ends of the value chain. Upstream, the growing d...

Read
Smartphone sales decline highlights need to move to a more service-based business model
07/11/2021

Global smartphone sales took a hit in Q3, disappointing those who had hoped the economy might be mov...

Read
PlasticsEurope calls for mandatory 30% recycling target for packaging by 2030
12/09/2021

The European plastics industry last week took the crucial first step in moving away from virgin plas...

Read
Samsung stumbles in global smartphone market as Xiaomi overtakes Apple
08/08/2021

Smartphone sales confirm that global markets are continuing to pivot to the New Normal world. Back i...

Read
Brand-owners start to focus on renewable carbon
13/06/2021

The original debate on plastics recycling owed its prominence to Ellen MacArthur, the yachtswoman wh...

Read
“One size no longer fits all” as the global smartphone market breaks down into different segments
30/05/2021

The pandemic was very good news for some companies, with demand for online activities rocketing. But...

Read
Biden’s Earth Day Summit puts plastics recycling on the fast track
25/04/2021

Plastics has long been the ‘odd one out’ in terms of recycling. Steel, aluminium, glass,...

Read
Americans hunker down on spending as the pandemic’s impact continues
11/04/2021

US stock markets have been hitting new records recently, as investors swoon over the idea that the $...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more