Auto sales sets new record: ICRA

Customer Click - - RESEARCH NOTES - ICRA -

The domestic pas­sen­ger ve­hi­cle (PV) seg­ment reg­is­tered a healthy sales growth rate of 9.20% as vol­umes crossed 3 mil­lion mark for the first time dur­ing 2017. Ac­cord­ing to rat­ing agency, ICRA note, sales re­cov­ered hand­somely dur­ing Q4FY17 with YOY growth of 11.1% as com­pared to 1.8% growth dur­ing Q3FY17 (post de­mon­e­ti­za­tion im­pact). This de­vel­op­ment has cat­a­pulted the In­dian PV mar­ket as the 5th largest PV mar­ket by vol­ume (after China, US, Ja­pan and Ger­many) and it is ex­pected to be­come third largest by next 3-4 years.

Ac­cord­ing to Subrata Ray, Group Head, ICRA: “Amongst all au­to­mo­tive sub­seg­ments, PV seg­ment has high fi­nanc­ing pen­e­tra­tion which largely in­su­lated the seg­ment growth due to liq­uid­ity crunch dur­ing de­mon­eti­sa­tion, wit­nessed across other seg­ments like two-wheeler or light com­mer­cial ve­hi­cle.”

An­other key area was stel­lar ex­port growth (+16.2%), which con­trib­uted about 20% of to­tal whole­sale vol­ume sales dur­ing FY17, whereas domestic whole­sale vol­ume ac­counted for rest. PV ex­ports, es­pe­cially for com­pact and su­per com­pact cars and UVS, are likely to wit­ness healthy growth in the medium term.

In terms of break-up, dur­ing FY17, domestic pas­sen­ger car (hatch­backs, sedans) ac­counted for 69% of to­tal domestic PV sales fol­lowed by util­ity ve­hi­cle seg­ment (25%) and van seg­ment (6%). While PC seg­ment ac­counted for bulk of vol­ume, the growth over last few years is pri­mar­ily driven by UV seg­ment and con­se­quently share of UVS in over­all PV sales is also in­creas­ing grad­u­ally, ac­counted for one fourth of in­dus­try sales vol­ume dur­ing FY17. The UV ve­hi­cle seg­ment is ex­pected to con­tinue to out­per­form.

Over­all, top 3 play­ers - Maruti Suzuki In­dia (47.4%), Hyundai (16.7%) and M&M (7.8%) con­tinue to main­tain their mar­ket po­si­tion dur­ing FY17. Tata Mo­tors main­tained its sta­tus as fourth largest domestic PV player with mar­ket share of 5.7% fol­lowed by Honda (5.2%), Toy­ota (4.7%) and Re­nault (4.4%).

“Over­all macroe­co­nomic in­di­ca­tors re­main favourable with GDP growth ex­pected at 7.2% in FY18E and ru­ral in­come also pro­jected to re­cover in the back­drop of nor­mal mon­soon ex­pec­ta­tion. Also, cost of car own­er­ship con­tin­ues to mod­er­ate on ac­count of falling in­ter­est rate and sub­dued fuel prices. Given the low pen­e­tra­tion lev­els in the coun­try, the longterm prospects of the in­dus­try re­main favourable. ICRA ex­pect domestic PV sales growth to grow by 9%-10% dur­ing FY2018 and we main­tain a 9%-11% CAGR es­ti­mate over the next 5 fis­cals,” says Ray.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.