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Pas­sen­ger ve­hi­cle sales in In­dia crossed the three mil­lion mile­stone for the first time in 2016-17, with the seg­ment wit­ness­ing a growth of 9.23 per cent. For the fis­cal ended March 2017, do­mes­tic pas­sen­ger ve­hi­cles (PV) sales were at 30,46,727 units as against 27,89,208 in the pre­vi­ous year, ac­cord­ing to data re­leased by the So­ci­ety of In­dian Au­to­mo­bile Man­u­fac­tur­ers (SIAM). On the sales per­for­mance, SIAM Deputy Di­rec­tor Su­gato Sen said the year wit­nessed the high­est sales of pas­sen­ger ve­hi­cles, util­ity ve­hi­cles, mo­tor­cy­cles and scoot­ers. "In terms of pas­sen­ger ve­hi­cles, we crossed the three mil­lion mark for the first time," Sen told reporters here. "The growth in PV sales is driven largely by de­mand for util­ity ve­hi­cles ahead of sedans and hatch­backs," he added. Dur­ing the year, util­ity ve­hi­cle sales were at 7,61,997 units as against 5,86,576 units in the pre­vi­ous fis­cal, a growth of 29.91 per cent. "This is the high­est growth rate achieved by the UV seg­ment af­ter 2013-14 when it grew by 52 per cent," Sen said. SIAM Di­rec­tor Gen­eral Vishnu Mathur said there is a read­just­ment hap­pen­ing in the In­dian pas­sen­ger ve­hi­cle mar­ket with de­mand for util­ity ve­hi­cles ris­ing at a much faster rate ahead of con­ven­tional cars. Do­mes­tic car sales dur­ing the year grew 3.85 per cent to 21,02,996 units as against 20,25,097 units in the pre­vi­ous year. This was the low­est growth since 2014-15, when car sales rose by 5.09 per cent. Maruti Suzuki's Vi­tara Brezza, Hyundai's Creta, Re­nault Duster, Mahin­dra Scorpio and Ford Ecos­port are among the pop­u­lar SUV mod­els in In­dia at present. Mathur said the in­dus­try has been able to grow de­spite chal­lenges of ban on big diesel SUVs and cars in the Na­tional Cap­i­tal re­gion and demonetisation. "As for demonetisation, the im­pact was for only two months on the PV seg­ment and re­cov­ery was quick, but it was pro­longed in the twowheeler seg­ment," he said. In 2016-17, mar­ket leader Maruti Suzuki In­dia re­tained its top po­si­tion in the do­mes­tic PV space sell­ing 14,43,641 units at a growth of 10.59 per cent. Ri­val Hyundai Mo­tor In­dia was a dis­tant sec­ond with 5,09,705 units at a growth of 5.24 per cent fol­lowed by home­grown Mahin­dra & Mahin­dra in the third spot with 2,36,130 units, down 0.07 per cent. Tata Mo­tors over­took Honda Cars In­dia to oc­cupy the fourth spot with 1,72,504 units, up 15.45 per cent, while the Ja­panese ri­val sold 1,57,313 units dur­ing the year, down 18.09 per cent. To­tal two-wheeler sales dur­ing the year stood at 1,75,89,511 units as against 1,64,55,851 in the pre­vi­ous fis­cal, up 6.89 per cent. Sales of com­mer­cial ve­hi­cles were up 9.26 per cent at 87,257 units in March, SIAM said. Ve­hi­cle sales across cat­e­gories logged a growth of 1.33 per cent at 18,80,352 units, from 18,55,623 in March 2016, it added. On the out­look for the cur­rent fis­cal, SiAM said that do­mes­tic pas­sen­ger ve­hi­cle sales were ex­pected to grow by 7-9 per cent in 2017-18, with 7th Pay Com­mis­sion pay­out and bet­ter rabi out­put likely to sup­port growth. How­ever, in­crease in raw ma­te­rial costs and oil prices may neg­a­tively im­pact sales dur­ing the on­go­ing fis­cal dur­ing which the num­ber of new model launches will also re­main low with cars likely to see more launches com­pared to util­ity ve­hi­cles, it added. "We are see­ing an im­prove­ment in the eco­nomic growth and also con­sumer sen­ti­ment. Fac­tors like lower bor­row­ing costs, pent-up de­mand af­ter demonetisation and a mild bud­getary sup­port to in­comes will drive con­sump­tion growth in 2017-18," Sen said. On the pas­sen­ger ve­hi­cles front, he said: "Over­all, the seg­ment is ex­pected to grow by 7 per cent to 9 per cent." Sen said de­mand will also be back as ad­di­tional pro­duc­tion ca­pac­i­ties be­come op­er­a­tional to fur­ther help re­duce wait­ing pe­riod for many of the pop­u­lar mod­els. He, how­ever, cau­tioned that cost of own­er­ship is ex­pected to rise by 4-6 per cent in 2017-18 for petrol and diesel cars as a re­sult of in­creas­ing cost of raw ma­te­rial. "More­over, oil prices are also ex­pected to re­main higher which would con­trib­ute to the in­creas­ing cost of own­er­ship and likely to neg­a­tively im­pact sales in 2017-18," he added. In the two-wheeler seg­ment, SIAM said it ex­pects mo­tor­cy­cles sales to grow mod­er­ately in 2017-18 with de­mand in econ­omy and ex­ec­u­tive sub-seg­ments likely to re­vive grad­u­ally once the cash sit­u­a­tion im­proves. "Ma­jor­ity of de­mand in these seg­ments is from the rural ar­eas," Sen said, adding that mo­tor­cy­cle seg­ment was the worst hit due to demonetisation. An ex­pected good rabi crop out­put will fur­ther re­vive sen­ti­ment and boost con­tri­bu­tion from the rural side, he added. For scoot­ers, sales are ex­pected to con­tinue to grow in dou­ble dig­its in 2017-18, Sen said. "A steady trend of in­crease in the pro­por­tion of fe­males in ur­ban re­gions join­ing the work­force has kept the ur­ban work­force growth rate higher, which is a big con­trib­u­tor to scooter sales," he ex­plained. Over­all, while ease in bor­row­ing cost, re­mon­eti­sa­tion and much im­prove­ment in gen­eral sen­ti­ment are pos­i­tives for 2017-18, Sen said. Ac­cord­ing to him, the key con­cerns are in­creas­ing com­mod­ity prices, high ve­hi­cle fi­nance rates and ad­hoc changes in pol­icy en­vi­ron­ment that could af­fect prof­itabil­ity of OEMs. The over­all com­mer­cial ve­hi­cle seg­ment is ex­pected to grow by 4-6 per cent while that of three-wheeler sales is likely to post a low sin­gle digit growth, SIAM said.

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