Despite numerous promotional offers and discounts in the run-up to the Diwali festival, in the last week of October, the latest automobile sales numbers for September show a sharp decline when compared with the corresponding period last year.

However, some auto manufacturers in India have not given up hope, as their September sales were better than in August and they still expect the numbers to improve in October.

The country’s largest carmaker, Maruti Suzuki, a unit of Japan’s Suzuki Motor Corporation, witnessed a 32.7% fall in sales during September. It sold 122,640 units – against 162,290 units in September 2018. But on a sequential basis, Maruti Suzuki sales grew 15.25%, as it had sold only 106,413 vehicles in August.

The sharpest decline (42.6%) was in the mini-cars segment comprising the Alto and WagonR, which saw total sales of 20,805 units, compared to 34,971 units in the same month last year.

The compact segment, including models such as Swift, Celerio, Ignis, Baleno, and Dzire fell 22.7% to 57,179 units, as against 74,011 cars last year.

Hyundai, Tata

The country’s second-largest carmaker Hyundai Motors India, a unit of South Korea’s Hyundai Motor Company, registered a decline of 8.05% sales in September compared with the period one year ago. It sold 57,705 units this year, as against 62,757 last year. However, its exports grew 13.5% to 17,000 units in September 2019, up from 14,976 units in September 2018.

On a sequential basis, Hyundai’s sales surged 51%, as it had sold only 38,302 units in August.

Meanwhile, Tata Motors, a unit of salt-to-software conglomerate Tata Group, didn’t fare so well, with sales nearly halved this September (down 49.9%), when compared with September 2018. Last month it sold just 32,376 units, which was a big fall from 64,598 vehicles last year.

But, on a sequential basis, its sales soared more than four times (342%). In August it managed to sell only 7,316 vehicles.

Honda, Toyota

Honda Cars India, a unit of Japan’s Honda Motor Company, registered a 31% decline in sales during September when compared with the period one year ago. It sold 10,247 units this September as against 14,820 units last year.

But it managed to sell more units when compared with August this year (8,291 units).

However, there was no such solace for Toyota Kirloskar Motor Pvt Ltd, a unit of Japan’s Toyota Motor Corporation, and homegrown brand Mahindra & Mahindra, as their September sales were not just lower than last year, but down also when compared with August.

Toyota sold only 10,911 units this September, while it had sold 13,078 units in September 2018 – a decline of 16.57%. This is also 5.48% less than the number of units it sold in August (11,544).

Mahindra & Mahindra sold 43,343 units this September, while a year ago it sold 55,022 units. That is a drop of just over 21%. In August it sold 48,321 units, hence a drop of 10% on a sequential basis.

Market analysts blame sluggish sales to widespread unemployment, job losses, and poor wage growth. People are looking to reduce their expenditure and sentiment has been less positive.

Banks cautious

Banks are also exercising greater caution when disbursing loans for people to buy cars. Rejection rates for new vehicle finance have shot up to 15-20% from 3-4% during normal periods, Economic Times reports.

After the country’s largest shadow banker IL&FS went bust, many other shadow bankers have pulled back from vehicle financing. They used to follow an easy-lending criteria, but customers are struggling now to find alternate sources of funding.

Banks have increased the margin that customers pay when purchasing a vehicle and also hiked the CIBIL score requirement – derived after assessing a person’s credit history and used as a yardstick to measure creditworthiness – to sanction loans.