NEW DELHI: Passenger vehicle sales stayed in the fast lane well into the mid-year, with expectations of good monsoon rains and a favourable macroeconomic environment boosting consumer sentiment.
Numbers reported by automakers on Thursday suggest a more than 9% increase in passenger vehicle sales to 2.48-2.50 lakh units in May. That comes after wholesale volume — automobile companies don’t report retail sales — rose 12% to 1.08 million vehicles in the first four months of 2017, suggesting that the industry is on course to post another impressive year. In the fiscal year ended March 31, total sales had topped 3 million for the first time. For the current fiscal year, industry body Society of Indian Automobile Manufacturers (SIAM) estimates passenger vehicle sales to expand 7-9%.
Industry experts, though, expect a temporary blip in sales due to uncertainties about the impact of GST on vehicle prices — the expectation is that large vehicles will become cheaper, while the price of small cars will go up marginally. But they expect the momentum to return to the market after that.
VG Ramakrishnan, managing partner at consultancy firm Avanteum Advisors LLP said the growth fundamentals remained strong.
“Customers looking at purchasing larger sedans and sports utility vehicles, however, are likely to defer purchase decisions as there will be substantial price adjustments in these segments on account of GST,” he said. “Automakers will also have to revisit stocking patterns due to this transition and this may affect primary sales over the next two-three months.”
In May, industry numbers were buoyed by Maruti Suzuki, whose sales increased 15.1% to 1,30,248 units. While sales of mini cars Alto and WagonR grew 18.1%, those compacts Swift, Dzire, Ignis, Celerio and Baleno increased 10.1%. Demand for the Vitara Brezza boosted volumes in the utility vehicle segment, where sales rose 66.3% to 22,608 units.
Numbers for midsize sedan Ciaz, however, dropped 8.9%. At Honda Cars India, growth momentum remained strong given the demand for the new City and the WR-V. Volume grew 13.3% in the past month to 11,278 units, nearly 60% of which came in from the two models.
“We continue to receive strong demand for the New City and Honda WR-V,” chief executive Yoichiro Ueno said. “The government’s plan for timely rollout of GST and a better monsoon forecast will aid in sales growth in coming months,” he added. American carmaker Ford registered a 16.6% growth, selling 6,742 units in May.