The domestic passenger vehicle (PV) sales in India have grown by 9.20%, catapulting the country to become the fifth largest PV market in the world, only after China, US, Japan and Germany. The sales figures surpassed the three million mark in financial year 2017. Ratings agency ICRA has noted that India's PV sales recovered during Q4FY17 registering a year-on-year growth of 11.1%, as compared to 1.8% growth in the post-demonetisation period in Q3FY17. At this pace, the PV market in India is expected to become the third largest in the world within the next three-four years.
“Amongst all automotive sub-segments, PV segment has high financing penetration which largely insulated the segment growth due to liquidity crunch during demonetisation, witnessed across other segments like two-wheeler or light commercial vehicle,” Subrata Ray, ICRA ltd Group Head, said.
A major factor behind such good sales figures of the PV market can be attributed to export growth (+16.2%), which contributed about 20% of total wholesale volume sales during FY17, whereas domestic wholesale volume accounted for rest. PV exports, especially for compact and super compact cars and UVs, are likely to witness healthy growth in the medium term.
For example, Ford India registered an impressive growth in the month of April. The combined domestic and export sales grew to 25,149 vehicles, up from 16,470 units in the same month last year. While domestic sales rose to 7618 vehicles from 6531 units, the brand reported stellar growth in exports which now stand at 17,531 units from 9939 vehicles in the same month last year.
In terms of break-up, during FY17, domestic passenger car (PC: hatchbacks, sedans) accounted for 69% of total domestic PV sales followed by utility vehicle segment (25%) and van segment (6%). While PC segment accounted for bulk of volume, the growth over last few years is primarily driven by UV segment and consequently share of UVs in overall PV sales is also increasing gradually, accounted for one fourth of industry sales volume during FY17. The UV vehicle segment is expected to continue to outperform.
“Overall macroeconomic indicators remain favourable with GDP growth expected at 7.2% in FY18 and rural income also projected to recover in the backdrop of normal monsoon expectation. Also, cost of car ownership continues to moderate on account of falling interest rate and subdued fuel prices. Given the low penetration levels in the country, the long-term prospects of the industry remain favourable. ICRA expect domestic PV sales growth to grow by 9%-10% during FY2018 and we maintain a 9%-11% CAGR estimate over the next five fiscals.” Ray added.
Maruti Suzuki India (47.4%), Hyundai (16.7%) and Mahindra & Mahindra (7.8%) remain the top three players, maintaining their market position during FY17. Tata Motors maintained its status as fourth largest domestic PV player with market share of 5.7% followed by Honda (5.2%), Toyota (4.7%) and Renault (4.4%).
The country’s largest car manufacturer, Maruti Suzuki posted its best ever volume growth in April 2017 at 144,492 units in the domestic market, an increase of 23.4% compared with the same period last year. The sales figures of this month suggest that Maruti's brand perception is inclining towards the premium segment. The sales of the Ciaz had the least number of sales in April 2017 with 7,024 units sold when compared to the rest of Maruti Suzuki's model portfolio. However, sales of the executive sedan grew by a respectable 23.2 percent.
Tata Motors posted a 23% sales growth in April 2017 over the same month last year. Volumes were registered at 12,287 units within the month, with sales majorly driven by the success of new models such as the Hexa, Tiago and the latest Tigor.
Similarly, Toyota Kirloskar Motors announced its sales figures for the month of April 2017 which is a total of 14,057 units including exports of 1,109 units compared to a total of 9,507 units in April 2016. The prime contribution of the impressive growth of 52 percent in the domestic market came from the Toyota Fortuner and the Corolla Altis. In six months, the Fortuner has sold 12,200 units and the Corolla Altis too grew by 76 percent in terms of sales in its segment.