UV demand drives car sales to a record

Car makers sold almost 33 lakh passenger vehicles in India during April-March 2018, the highest ever in a financial year, driven by healthy demand for utility vehicles (UVs). The year also witnessed record two-wheeler sales at more than 2.01 crore units.

Domestic passenger vehicle sales grew 7.89% to more than 32.87 lakh during the last fiscal, besting the previous record of over 30.47 lakh units in 2016-17, according to data released by Society of Indian Automobile Manufacturers (SIAM).

While car sales rose by 3.33% to more than 21.73 lakh units, those of UVs rose nearly 21% to more than 9.21 lakh units.

“We ended the year on a positive note with almost every segment posting positive growth, except passenger buses. This reinforces the fact that despite having a difficult year, the auto industry has shown its resilience,” SIAM director general Vishnu Mathur said.

Total vehicle sales across categories grew 14.22% to more than 2.49 crore units in 2017-18. Mr. Mathur explained that in the just ended fiscal, the auto industry faced with the lingering effects of demonetisation, transition from BS-III emission norms to BS-IV across India and implementation of the GST.

Demand from towns

“What we are seeing now is that there is more demand coming from smaller towns and semi-urban areas. Many major automobile companies are trying to go to those markets,” he said, adding that the increasing popularity of UVs was another factor for the growth of passenger vehicles in India.

In FY18, sales of UVs accounted for 28% of total PV sales in India, up from 25% in the previous fiscal.

SIAM said during the last fiscal, passenger vehicle production crossed the four-million mark, with UV production crossing the one million mark. “The year also saw maximum two-wheeler sales at 2.02 crore units, as well as maximum two-wheeler production at 2.3 crore units. While production of scooters crossed 71 lakh units, that of motorcycles crossed 1.5 crore units,” SIAM said. During the previous year, commercial vehicle sales grew nearly 20% to 8.56 lakh units. While sales of light commercial vehicles grew 25.42% to 5.16 lakh units, those of medium and heavy commercial vehicles rose 12.48% to 3.40 lakh units. On the outlook for the new financial year, SIAM said passenger vehicles were likely to witness high single-digit growth.

“Top 20 cities that contribute to about 50% of the sales have shown slow growth in the last 3-4 years; however the rural growth story will continue to support the industry in FY19,” SIAM said, adding that GST teething problems would be over and the trading community will start contributing to volumes.