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
Hertz goes bankrupt as non-essential consumer demand disappears
24/05/2020

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Read
Smartphone sales head into decline as affordability becomes key
10/05/2020

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

Read
China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry
26/01/2020

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Read
Automakers face stiff headwinds in big emerging markets
19/01/2020

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Read
Portugal shows the way to climate neutrality by 2050
24/11/2019

“If you don’t know where you are going, any road will do”. The Irish proverb’...

Read
The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones
10/11/2019

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....

Read
Companies ignore the Perennials 55+ generation at their peril
13/10/2019

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generat...

Read
Auto markets set for major disruption as Electric Vehicle sales reach tipping point
21/09/2019

Major disruption is starting to occur in the world’s largest manufacturing industry.  Hundred...

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