Car makers entering the Indian market, such as Kia Motors and MG Motors, see the downslide in sales as a temporary phenomenon.

“We do not think the depressed sales will continue for a long time. Sales are expected to pick up during the festive season in the beginning of the third quarter,” said a source at Kia Motors India.

Passenger vehicle sales dropped the most in seven-and-a-half years in April. A host of disruptive factors have roiled the sector, including the recent crash crunch among NBFCs, the slow start to the monsoons, high fuel costs and the tightening of the insurance norms. Major regulatory changes, including new safety norms and the BS-VI transition, are set to increase vehicle manufacturing costs, which is expected to impact demand in a price-sensitive market such as India.

Yet the car makers are optimistic. “We think the current slowdown is just a dent caused by elections and a crunch in the financial markets and not really a downturn in the market,” said Lorenz Glab, vice-president and head of global product management, Kia Motors Corporation.

Similar views were expressed by Thierry Bollore, CEO of Groupe Renault. “All markets worldwide are facing turbulence. They are not as strong as last year. Indian market conditions are not a regional phenomenon,” said Bollore.

However, an industry insider pointed out that these car makers were betting big on the Indian market as major global markets such as Europe and the US have slowed down.

India sold 4 million vehicles in 2018 and is poised to be the third-largest market by 2022.