Is falling Auto sales a real worry or a market adjustment?

For the past few months, there has been a consistent drop in Auto Sales across almost all leading companies. This has been true for all segments including Passenger vehicles, Commercial Vehicles and also Tractors.

A lot if discussion in the media and experts is currently revolving around the slowdown in demand. Coupled with the GDP data, the hypothesis for the same seems to have some valid justification in the perspective of some people.

My personal take here is drop is Auto sales is nothing to worry about in the medium to long term. India is passing through a transition phase in Automobile industry. My gut feel is;

a) OEM to Dealer is the sales that is recorded. The drop in auto sales at the moment may have to do with aligning to BS VI which is to be rolled out effective 1st April 2020. There may be a possibility that the OEM's would keep lesser pipeline inventory of the old version. So the push from OEM to Dealer is less. This balancing of inventory naturally has reflected in lower sales figures reported. By Q4 19-20 all auto majors will move production to BS VI. 

b) With the largest passenger vehicle manufacturer in India declaring that it would stop production of diesel cars from Apr 2020 must have had a dampening impact of market. It doesn't mean that the demand has vanished. 

c) Market participants must be getting ready for electric vehicle. Transition has its own benefits in the long term with pains in the short term. If Automobile industry history is any reference, then in transitions in the past have been much faster and swifter than initial anticipation. So it becomes a wait and watch for many market participants.

d)  With lower range of GDP growth we still will grow 6.0-6.5% and optimistically we may by 7.5-8%. When a country grows, goods have to move. Which means one way or the other commercial vehicle demand will shift upwards. Close to 1/3rd of all transportation in India happens using roads. With new ways of transportation coming up, I don't think road transportation share in total transportation will dramatically drop. So with GDP growth, increased demand for goods hence need to transport, Commercial vehicle sales will catch up.

India is the country with one of the lowest penetration of vehicles per 1000 population. For 1.3  billion nation, we sale 3.4 mio passenger vehicles. With all the talk around shared transportation, lack of incentive to own a car or interest rates high leading to dampening the demand have really no significant impact on India unless India is an outlier compared to global data on vehicle consumption.