No Quick Rebound Likely for Car Sales in India

India’s passenger car market, which shrank more than 12% to 5.3 million wholesales through July, isn’t likely to recover until about 2025, says LMC Automotive.

Volume will skid 11% in calendar 2019 to 3.56 million units if the government doesn’t hike sales incentives—and 8% if it does, the firm predicts. LMC Automotive says light-vehicles sales are down more than 22% in the fiscal year that began April 1.

Multiple factors are contributing to India’s current slump. They include a five-year cyclical downturn exacerbated by a protracted general elections, tighter credit, a softening national economy, unclear government policies on diesel and electric cars, and a rollout of tougher emission and safety standards that LMC Automotive says have already boosted retail prices roughly 12%.

India’s light-vehicle market will grow only 2% to 3.62 million units in 2020, the firm predicts. It says new emission standards will trigger a sharp drop in second-quarter sales, followed by gradual recovery through the second half of the year.

New fuel economy standards, likely to begin taking effect in 2022, will propose another sales downturn, LMC cautions. Still, the firm says India’s car market will expand by an average 6% annually over the next seven years to reach 5.25 million units in 2026.