With domestic passenger vehicle sales growing at a slow rate of 3.27% in the April-February period , the auto industry now expects to end the year at about the same rate, missing the earlier forecast of 6% growth.
Passenger vehicle (PV) sales, as per data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday, grew to over 30.85 lakh units in the April 2018-February 2019 period, from over 29.87 lakh units in the corresponding period of the previous year. The industry body expects the uncertainty ahead of elections amid subdued consumer demand as high interest rates and insurance costs continue to affect sales.
“What we are seeing is that market sentiment is subdued. Interest rates are still high and we have not been able to recover from the impact we have had earlier on in the year,” SIAM director-general Vishnu Mathur said.
In February 2019, sales declined almost 1% to over 2.72 lakh units compared to a year earlier. This is the seventh instance of a fall in sales growth in the last eight months. Stating that it was unlikely that March sales would be high, he said SIAM was expecting “to end the year at around 3% growth”. At the beginning of the fiscal, it had forecast 8-10% growth for PV sales, which was later revised to 6%.
Two-wheeler sales
While two-wheeler sales declined 4.22% to over 16.15 lakh units in February, for the April-February period, the segment grew 6.95% to 1.97 crore units.
Likewise, commercial vehicle sales saw marginal decline of 0.43% to 87,436 in February, while registering a growth of nearly 20% in the April-February period.
Vehicle sales across categories registered a decline of 3.65% to over 20.34 lakh units in February 2019. For the 11- month period ended February 2019, total vehicle sales were up 7% to over 2.43 crore units.
Sridhar V, partner, Grant Thornton India, said: “Though the sector was able to revive from the bleak performance over the last few months, it could not match the February 2018 level.”
“The subdued performance can be attributed to low consumer demand caused by higher interest rates, slowing industrial output and moderate economic activity ahead of general elections scheduled for May,” he said. Mr. Sridhar noted that CVs, which were managing a good run till recently, too posted a decline. A cut in the interest rate announced by the Reserve Bank of India in February, which is yet to be effected at the financing end, along with some introductions, should hopefully perk up volumes in the months to come.