Passenger vehicle sales indicate recovery

A low base effect has helped the Indian automobile industry report impressive domestic sales growth of 16% in the passenger vehicle segment, the highest in past 30 months. The medium and heavy commercial vehicles (M&HCVs) also saw strong growth rate of 25%, while the sale of two-wheelers remained flat, impacted by a declining trend in motorcycles.

Data released today by the Society of Indian Automobile Manufacturers (SIAM) showed that sale of passenger vehicles grew to 217,949 units in April vis-a-vis same month last year per centage wise, the 16% jump is the highest in last thirty months. On a sequential basis, however, sales dropped 11% from 244,395 units sold in March 2015.

The growth in passenger vehicles is not broad based and driven only by companies like Maruti, Hyudai, Honda and Toyota Kirloskar. Mahindra & Mahindra’s sales remained flat while General Motors and Ford witnessed decrease of 35 and 26%, respectively. Exports of passenger vehicles, accounting for less than one-fifth of sales, also grew by a handsome 21%.

“The numbers in passenger vehicles indicate a trend of recovery while growth is still away. The medium and heavy commercial vehicles, which were on a decline for over two years, have seen nine months of consecutive growth”, said Vishnu Mathur, Director General, SIAM. He added that growth in M&HCVs shows there is an uptick in industrial and mining activity.

Amit Kaushik, Principal Analyst - IHS Automotive, said the current economic environment represents a mixed scenario with inflation easing out but weak rural demand coupled with high interest rates. “It can potentially put pressure on vehicle sales in the coming months‎”.

Domestic sale of two-wheelers, marred by income uncertainties in rural India, remained flat. Sales, however, are down on a sequential basis, showing a drop of nearly 3% from March 2015. Within the two-wheeler segment, motorcycles (which account for bulk of the two-wheeler market) sales remained in the negative zone, declining 2.77% from same month last year. Motorcycle exports slipped 6%.

Industry leader Hero MotoCorp saw its sales of motorcycles dip 5.44% while sales at Honda Motorcycle and Scooter India (HMSI) remained flat. Scooters, however, grew over 5% in April. HMSI, the largest player in scooter, grew its scooter sales by 16% while rival Hero MotoCorp saw sales dip by over 10%. Yadvinder Singh Guleria, senior vice-president and operating head (sales and marketing) at HMSI said last week that the company is closely watching the economic situation in the rural areas. “There is a caution”. A slowing rural market, impacted by damage to Rabi crop and projection of a sub-normal monsoon, is impacting motorcycle sales.

An interesting trend is seen in the passenger carrier three wheeler segment where exports zoomed 79% to 47,333 units, much higher to domestic sales of 25,607 units. Bajaj Auto, the market leader, saw exports more than double to 36,361 units.