Scooter sales decline for first time since Jan 2017
REPORT CARD Motorcycle sales rise 15%, the slowest pace in 7 months in May
MUMBAI: While rural demand for entry-level and commuter motorcycle has picked up, scooter sales fell 1.4% in May to 555,467 units, the first decline since January 2017. Scooters are primarily a big draw from the urban Indian population.
Motorcycle sales, though advancing at the slowest pace in seven months, posted a healthy growth of 15.16% to over 1.22 million units during the month on the back of the recently concluded wedding season, show monthly sales data released by industry lobby Society of Indian Automobile Manufacturers (Siam).
Motorcycle sales expanded faster than scooter sales for the fourth straight month.
The development augurs well for motorcycle makers, such as Hero Motocorp. Ltd and Bajaj Auto Ltd, which had witnessed declining market share through FY18.
Motorcycle sales had taken a hit due to a prolonged slump in rural demand, where customers prefer no-frills motorcycles compared to urban India’s penchant for gearless scooters.
Higher public spending in rural areas and the IMD’S forecast of a normal monsoon will further provide an uptick to rural sentiments.
An inventory correction also led to the decline in scooter sales, said Sugato Sen, deputy director general, Siam, while adding that the rejuvenation i n rural demand is reflecting in motorcy- cle sales. Sen, however, expects scooter sales to be back in the black in June, since they have been witnessing a larger contribution from semi-urban areas in recent times.
The scooter segment was the only sore thumb in an otherwise positive month for the automotive sector.
Sales of passenger cars and utility vehicles grew 19.64% and 17.53%, respectively, on the back of a low base in May and June last year. Car buyers had delayed purchases in anticipa- tion of a price drop post the implementation of the goods and service tax (GST) on July 1, 2017.
New launches and facelifts also contributed to sales during the month. Passenger cars expanded at a faster clip than utility vehicles after a period of at least 40 months, owing to more upgrades.
For instance, market leader Maruti Suzuki India Ltd’s bestselling hatchback Swift and Hyundai Cars India Ltd’s Grand i20 hatchback had gone through a facelift.
However, higher crude oil prices and its impact on inflation remained a key hurdle, and may have impacted sales of twowheelers and entry-level passenger cars, according to Binaifer Jehani, director, Crisil Research.
Though Siam is also cautious about higher crude prices, it expects personal vehicles to grow in the high-single digits this fiscal, Sen said.
Sales of commercial vehicles rose 43.06% to 76,478 units largely due to a low base prompted by substantial sales before the Bharat Stage-iv (BS-IV) emission norms came into effect on 1 April last year.
A fall in production of BS-IVcompliant vehicles had also caused a slump in sales last year.
Top commercial vehicle makers, such as Tata Motors Ltd and Ashok Leyland Ltd, expect truck and tipper sales to sustain the momentum they had gained in FY18 for another two to four years on the back of a broadbased economic recovery. The government’s sustained infrastructure development drive, stricter implementation of overloading rules and a strong movement towards higher tonnage vehicles owing to their low operating costs, may also contribute to the sales figures, Mint had reported on 8 June.
A healthy replacement cycle, strong consumption-driven demand and an improved financing environment also increased sales of lighter trucks, said Shamsher Dewan, vice-president (corporate sector ratings) at Icra Ltd.
Graphics by Subrata Jana/mint