Automobile sales in India grew 25.23% in June from the year-ago period, according to data from the Society of Indian Automobile Manufacturers (SIAM) released on Tuesday. Total June sales rose to 2,279,151units from 1,819,926 units, an average sale of 75,971 units a day.

The major driver for sales growth in June was the three-wheeler segment—which includes both passenger and goods carriers—which grew 55.89% to 56,884 units from 36,491 units in the year-ago period. Overall, the passenger vehicles segment grew 37.54% from 199,036 in the year-ago period to 273,759 units while two-wheeler sales grew the slowest at 22.28% to 1,850,093 units from 1,694,323 in June 2017.

In June 2018, the industry produced a total 2,684,483 vehicles including passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycle as against 2,247,691 registering a growth of 19.43% over the same period last year.

Growth in June looks good due to the lower base last year which saw plummeting vehicle sales ahead of introduction of the goods and services tax (GST) in July.

"Last year during this time, we had the GST coming in and consumers delayed their purchase expecting that the price will come down that led to very significant drop in sales in the May-June period. During that time some companies also stopped their dispatches owing to low demand," Sugato Sen, deputy director general, SIAM said in a press address.

He adds that new product launches and introduction of variants such as BMW X3, Mercedes-AMG E63, Ford Freestyle and Toyota Yaris etc. indicate a good buying intent.

Auto experts say that this kind of growth was expected because of the GST effect and add that the forthcoming festive season will help boost sales.

“At that time, everybody was shutting off their retail sales and they wanted to clear their stocks because they wanted to have a new billing system from the first of the July. If you compare month to month, you will not find a major jump here from last month,” said Gaurav Vangaal, senior auto analyst at global consulting firm IHS Markit.

He added that next half could be “not so strong”. “Even when the monsoon is very good this time, we expect the sales to slow down a little bit. Last year we had good sales after GST. We expect a little bit of slowdown. But overall market is going to grow,” he said.

In the first quarter of this year, the industry registered a growth of 16.55% with production at 8,064,239 units compared to the April-June quarter last fiscal while total domestic sales during the quarter grew 18.01% to 6,942,612 units as compared to 5,882,912 units in the same quarter last year. During the quarter, domestic sales of passenger vehicle increased 19.91% to 873,501 units as against 728,483 vehicles in the same period last year while total sales stood at 69,62,612 units from 5,882,912 at a growth of 18.01% in the domestic market.

On its outlook for FY19, SIAM expects GDP growth to revive boosted by impressive growth in manufacturing sector, an increase in government spending to revive growth, and a normal monsoon is also expected to boost rural demand. “GDP is estimated to grow at 7.5% in FY19 and is expected to be mildly supported by public spending (with a rural focus) in infrastructure, especially roads,” SIAM report says.

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