If investors expected passenger vehicle (PV) sales to revive in April after a massive inventory clean-up in the March quarter, they will be disappointed. Maruti Suzuki India Ltd’s sales raced downhill, tumbling 17% from the year-ago period.

This does not bode well for the PV industry, considering that Maruti has over half the market share.

The biggest drop of 40% in the mini car segment can be explained by the shift in some models, such as WagonR, to the compact segment. But then, sales in the compact segment, which comprise more than half of Maruti’s passenger vehicle sales, fell 14% year-on-year.

The numbers raise concerns both on inventory and demand inertia, which have struck India’s auto universe. But note that analysts were already factoring in a large drop in sales.

Emkay Global Financial Services Ltd estimated a 16% drop in Maruti’s sales for the month due to lower despatches in the mini segment.

“The weak performance was expected across segments in the domestic market due to the high base effect, purchase deferrals during elections, inventory corrections and funding issues. Volumes should be lower y-o-y despite the favourable timing of the festive season," it said in a note to clients.

Industry watchers reckon that higher vehicle prices due to the inclusion of additional safety features from April have perhaps dampened demand.

Meanwhile, the transition in technology due to BS-VI emission norms, which will be enforced from 1 April 2020, and Maruti’s announcement that it would phase out diesel vehicles by 31 March may have put consumers on the back foot.

Some respite came from the 6% growth in utility vehicle sales. The moot question, however, is: Has Maruti lost market share to other incumbents? Numbers from other PV makers will throw light on this front.

Shares of the country’s largest car maker are likely to open lower on Thursday—when markets resume trading after Wednesday’s public holiday—reiterating subdued growth forecasts for fiscal year 2020.

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