Passenger car sales grew the fastest in more than two years this October, thanks to the festival season coupled with heavy discounting.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), sales were up 34% to 132,615 units year on year — the ninth straight month of growth. Growth in bike sales was also a robust 14.22% at 6,11,828 units.
Commercial vehicle sales continued their uptrend with a whopping 51.9% increase to 42,562 units.
Overall domestic vehicle sales grew 15.6% to 10,00,760 units.
Analysts feel car and bike makers will be watching sales patterns for the next two months to determine the market momentum, with some cautioning against continued growth. The third quarter is anyway traditionally a low sales period for the industry.
The robust sales growth in October rode on two of the biggest buying festivals in the Indian calendar — Dhanteras and Diwali.
Increased spending by certain sections of consumers, such as government employees and rural buyers, also helped matters.
The continued growth in vehicle sales is as much a function of improving economic conditions as of the fiscal stimulus package the government announced last December. Till the lower tax rate regime continues, vehicle makers can hope for continued growth momentum in the domestic market.
Also, judicious inventory management by most vehicle makers over the last several months helped bottomlines to the extent that many component suppliers are now finding it difficult to meet demand from OEMs who have ramped up production drastically.
However, continued supply disruption from some of the key parts’ suppliers for original equipment manufacturers (OEMs) affected companies such as Honda Motorcycle & Scooter India and Hero Honda.
Going by domestic vehicle sales in the April-September period, pockets of concern remain despite positive sentiment in the second quarter.
Total medium and heavy commercial vehicle (M&HCV) sales remain in the negative territory with de-growth of 11.26% to 112,965 units. Overall CV sales have grown just 5.36% to 263,091 units.
In the passenger vehicle category, cars have shown a healthy 17.46% growth to 821,954 units, but utility vehicles grew only 6.43% to 150,858 units due to continued differential duty regime.
Three-wheeler goods carriers continued to show negative growth. Sales fell 8.77% in the first half to 49,108 units.
Even on the exports front, the industry’s performance wasn’t bad, despite withdrawal of scrappage incentives by most European countries. Overall exports were up to 160,009 units (144,083 units), a growth of 11%.
Concerns, however, remain since six-month export growth across all vehicle categories has been only 5.45% at 968,464 units. Exports of CVs as well as three-wheelers have consistently remained below the year-ago numbers in the April-September period.
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