Vehicle registrations fall after new LTV rules

Following the introduction of new loan-to-value (LTV) ratios for vehicle financing, in mid-january, the number of vehicles registered for the first month of this year fell to 42,443 from 45,218 in December 2016, but recorded an increase from 32,006 year-on-year (YOY), according to the data compiled by a Colombo-based research house and equity brokerage.

“Implementation of the budget proposal to restrict credit to new cars (50 percent LTV) and three-wheelers (25 percent LTV) is the primary factor accounting for a plunge in registrations. The full impact of the directive will only be felt this month (February),” JB Securities said.

The massive fall in vehicle registrations in January 2016, compared to the same month in 2015, as well as months preceding and following January 2016 had also been due to the government forcing a 70 percent LTV ratio for all vehicles in the preceding month.

Total car registrations this January increased 7 percent YOY to 3,101, but recorded an 11 percent fall compared to December. Brand-new car registrations increased 13 percent YOY to 1,152, but fell 41 percent from December.

Maruti/suzuki retained the market leadership from December but volumes fell by nearly two thirds as just 342 units being registered in January, with 229 Altos and 94 Celerios.

Renault and Micro registrations also experienced massive declines during the period in question. The only brand that made gains was Hyundai, with 200 registrations, up from 96 in December through its Eon model.

In the pre-owned car segment, registrations in January increased 5 percent YOY and 27 percent from December to 1,949 units.

“A possible unintended outcome of this directive is that one-year old vehicles may increase in price for there are no LTV restrictions on them,” JB Securities said.

Toyota contributed most towards the growth in the pre-owned category with 1,060 registrations, while 550 Suzuki units were also registered. In the premium category, registrations increased to 67 from 49 in December and 30 YOY, with both pre-owned and brand-new segments witnessing growth. Mercedes Benz dominated the category with 25 brand-new units (10 C-class, 7 E-class and 6 S-class) and 25 pre-owned (10 C-class, 4 E-class and 2 S-class) units. Electric car registrations fell to 42 from 173 YOY but increased from 29 in December. Nissan Leaf, which has maintained a near-monopoly on the electric car market for the past three years, saw its market share falling below 75 percent for the first time since October 2014, with 16 of the January registrations being other models. Led by Honda Vezel (207 units) and Toyota Prado (46 units) the SUV and crossover segment recorded 433 registrations, down from 563 YOY but increasing from 415 in December. The hybrid segment fell 3 percent YOY but increased 23 percent from December with 1,883 registrations, of which 774 were Toyotas, with 457 Axios and 257 Aquas. There were 511 Suzuki registrations, most of which were Wagon Rs, while 252 Hondas were also registered, split evenly between the Fit and Grace models. The van market expanded 65 percent YOY and 199 percent from December to reach 595 registrations, a majority of which were preowned Suzuki Every mini-vans.

The three-wheeler segment, which was most affected by the LTV rules, recorded 3,327 registrations, falling 4 percent YOY and 45 percent from December. Bajaj threewheelers accounted for 85.8 percent of the registrations, losing some market share to TVS compared to December. Registration of two-wheelers increased to 31,158, up 46 percent YOY and marginally from December, with Honda increasing its market share to 32.5 percent in January from 28.2 percent in December, while Bajaj’s market share fell to 22.2 percent from 25.5 percent in December.