New Delhi / Auto Crisis: Vehicle registrations declined in Delhi for first time in 6 years

Hindustan Times : Sep 18, 2019, 01:30 PM
Reflecting a fall in automobile sales on the back of slower economic growth and consumer spending and local factors such as traffic congestion and parking constraints, vehicle registrations in the national capital have declined in the first eight months of 2019, the first drop for the period in six years, according to data from the ministry of road transport and highways and the state transport department.

The number of registrations, an indicator of sales, fell by 61,198 units to 425,691 in January-August from 486,889 vehicles that were registered in the same period last year. The 12.6% decline in the period is the first since 2014, the data shows. Two-wheeler registrations fell by over 13%, or 43,182 units, to 286,467.

Indian automobile sales have declined for 10 months in a row and in August posted the steepest drop ever, reflecting a downturn in consumer spending and overall economic growth, which slowed to 5% in the quarter ended June, the slowest pace in 25 quarters. According to data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales plunged 31.57% year-on-year to 196,524 units in August. Passenger car sales fell 41.09% to 115,957 units.

The August fall marked the worst decline for both the categories since SIAM started recording the data in 1997-98. Truck and bus sales dropped 39%. Two-wheeler sales fell 22% to 1.5 million units. The slump in auto sales had led to job losses in the sector as automakers, parts manufacturers and dealers let go of employees to cut costs.

Vehicle registrations have been particularly low in June, July and August. For example, around 49,000 vehicles were registered in August this year compared to 62,000 in August 2018, over 54,000 in 2017, around 56,000 in 2016 and around 54,000 in 2015 and 46,249 in 2014.

Demand for two-wheelers, which make up over 7.3 million or over 63% of the 11 million registered vehicles in Delhi, has seen a steep decline for the first time ever. Registrations of scooters and motorcycles fell 13.1% in the first eight months of this year.

Data on car registrations indicated that except in 2017, demand in Delhi has been declining gradually over the years. This year, the decline in the number of registrations has accelerated to a steep 10.7%. Transport minister Kailash Gahlot said Delhi, one of the biggest markets for automobiles in India, has suffered in terms of revenue as well. “Revenue earned by the state transport department through vehicle registrations and road tax has seen a decline since 2018, which is because of the slowdown in the economy. But this year, the fall in revenue has been steep — nearly 7%,” he told HT. In 2017, revenue collected by the department was around Rs 1,300 crore which has fallen to Rs 1,176 crore this year. During the same period in 2018, revenue was Rs 1,258.39 crore.

“The drop in revenue is not very steep for us. It shows that the demand may have declined, but in Delhi, those who are buying cars are opting for higher models, the road tax on which is higher,” said a senior transport department official wishing anonymity.

Dealers acknowledged there has been a considerable decline in the number of bookings. “Bookings have decreased this year. But since August the numbers have become almost negligible. We are now looking forward to the GST Council meeting, scheduled on September 20. There are talks that the GST on automobiles will be reduced from 28% to 18%. If that happens, then the demand will spike,” said RK Arora, owner of Krish Automotors Private Limited.

Experts said the demand downturn reflects a few local factors as well as the larger downturn. “Parking is a major cause [of the slowing demand for cars] in Delhi. People are becoming pragmatic and highly money- minded now. The sheer wastage of time in being stuck in traffic and then finding a space to park your vehicle is now making people believe that taking a cab instead is more convenient,” said Tutu Dhawan, automobile expert and classic car restorer. He added that the abundance of cabs coupled with a wider Metro rail network has pushed more people to avoid personal transport.

Sentiment in the automobile market has been downbeat because of factors such as higher petrol prices and costlier third-party insurances, said Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers (SIAM). “The increase in the cost of insurance is an important reason. Prices of every vehicle went up by about 10% because of this,” he said.

Other dealers said a reason for the slump in vehicle sales could be the compliance with stricter Bharat Stage-VI emission norms that kick in from April next year. “This will make vehicles costlier. As a result, many, at present, are just waiting (for a time) when dealers will start offering heavy discounts on cars and two-wheelers to clear their BS-IV inventory,” said a prominent dealer in the city who asked not to be named.