After a lacklustre October, sales of passenger and commercial vehicles accelerated in November raising hopes that the momentum gain will last all way through to the end of the fiscal, taking industry growth to the best in six years amid a broader economic revival. To be sure, November’s growth came on a low base as last year’s sales were hit by demonetisation.
With a good monsoon helping rural markets offset the note-swap’s effects, surging stock markets buoying consumer sentiment and growth rising to 6.3% in the July-September period after a five-quarter slide, the Society of Indian Automobile Manufacturers (SIAM) said the industry is likely to grow 8-10% for the entire fiscal year.
Growth of 8-10% will be the best in six years, a SIAM official said. The country’s automobile industry grew 6.81% in FY17, 3.78% in FY16, 7.06% in FY15, 3.54% in FY14 and 2.49% in FY13.
Adding to the positive sentiment was the 50.4% surge in commercial vehicle sales thanks to a government-led boost for infrastructure, auguring well for rising economic activity as manufacturers of goods and transporters get to grips with the goods and services tax, which was rolled out on July 1.
“Commercial vehicles have grown mainly on account of enhanced spending by the government on infrastructure projects,” said Vishnu Mathur, DG, SIAM. “The bus segment remains impacted as purchases are slow.”
While passenger vehicle sales grew 14.3%, those of two-wheelers grew 23.5%, adding up to an overall rise in domestic sales of 24% to 1.9 million units.
Market leader Maruti Suzuki continued to post strong sales with volume rising 14.3% to 144,297 units in November.
“The monsoon has been good, pay commission recommendations have been implemented, stock markets are doing fine… sentiments are good overall,” Maruti Suzuki senior executive director, marketing and sales, RS Kalsi told ET recently. “There’s usually a lull in the market after the festive season gets over…We will achieve our target of growing by double digits for the fiscal year.” Sales rose 10% to 44,008 units at Hyundai Motor India.
“The dip last month (October) was a one-off case. Most carmakers had streamlined dispatches post the festive season which reflected in wholesale numbers,” a senior executive at a Delhi-based car maker said on condition of anonymity. “We expect the industry to grow by at least 8-9% to 3-3.2 million units for the entire calendar year.” Commercial vehicles sales reflect a stabilising trend, said Sridhar V, partner at Grant Thornton LLP.