Passenger vehicle sales revive marginally in October: SIAM

The domestic passenger car market showed signs of revival in October with sales rising marginally after falling for four months in a row because of rising fuel and commodity prices as well as a poor monsoon.

Data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday showed sales of passenger cars—the largest segment by volumes—grew 0.38% to 1 85,400 units in October from 184,706 in the corresponding month last year.

Overall, the passenger vehicle segment—including cars, utility vehicles, and vans—increased 1.55% to 284,224 sales in October this year.

However, the commercial vehicle segment—which includes light, and medium, and heavy vehicles—logged an impressive 24.82% growth from 69,816 units in October last year to 87,147 units in 2018.

India’s second largest segment by volumes, two-wheelers, posted an increase of 17.23% to 2,053,497 units from 1,751,608 in the year-ago period.

However, passenger car exports took a hit and fell 13.40% from 46,300 units last October to 40,098 this year. Total exports grew by 22.61% and production went up 20.65% during the month.

In its second quarter review of the Indian automobile industry, SIAM said that commodities like steel, copper, natural rubber and aluminium are expected to remain firm in the forthcoming quarters. Therefore, sales are likely to improve once prices stabilise, experts say.

SIAM also said that auto sales suffered as key states like Gujarat, Bihar, and Jharkhand—which make up 10-15% of the total auto industry—received deficient monsoon this year.

According to SIAM, the auto industry could face challenges due to a steep rise in crude oil prices resulting in higher fuel prices and an increase in insurance price impacting cost of purchase. Moreover, heavy discounting in the medium and heavy commercial vehicle goods segment is putting pressure on margins.

According to auto experts, it has been a fairly tepid performance by passenger vehicles despite the festival season in October including Dussehra and pre-Diwali buildup of inventory at the dealership. "Within this segment utility vehicles have shown a little more interest. It appears the interest rates, fuel prices and insurance cost have been the cause," said Sridhar V, partner, Grant Thornton.

"However, the volumes are still at a decent level and if it continues at the same level the next 5 months it will end up with a high single digit growth."