PV SALES IN INDIA CROSS 3 MN MARK IN 2016-17
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.