Car sales growth dips, but Siam plays it down; find out why

The car segment, which makes close to 70% of the passenger vehicle segment, saw sales declining 0.86%

By: | Published: June 10, 2016 6:45 AM
Petrol cars, diesel cras, air pollution, car pollution, Hyundai, Mercedes Benz, Honda Of the five months since January, passenger car sales have declined in four months, except for April, when it grew 1.87%. (Reuters)

After a strong start in April with an 11% growth, passenger vehicle sales in May slowed down to 6.26%, pulled down by disappointing performance of the passenger car segment. The car segment, which makes close to 70% of the PV segment, saw sales declining 0.86%. The utility vehicle sub-segment, on the other hand, saw growth continuing in high double-digits at 36%.

However, industry body Society of Indian Automobile Manufacturers (Siam) played down the fall in passenger car sales. “Most of the recent launches have been in the smaller utility vehicle segment. A customer does not differentiate between a sedan (passenger car) or a small utility vehicle,” Siam director general Vishnu Mathur said.

Of the five months since January, passenger car sales have declined in four months, except for April, when it grew 1.87%.

Another shift in customer preference has been from diesel to petrol vehicles.

Compared to 34% share of diesel in total passenger car sales in 2015-16, only 28% buyers went for diesel cars in April, Mathur said. Even though the demand is shifting from diesel to petrol and from sedans to utility vehicles, overall recovery is taking place, he said.

“The recovery in the industry is continuing. The only concern for the industry at the moment is rural demand,” he said. The rural demand, according to some leading players, has slowed down in May, in comparison to April, he said.

Motorcycle sales, another indicator of rural demand, also saw growth slowing down from 16% in April to just over 3% in May.

The sudden high demand in April was mainly due to buying in the marriage season.

The month also saw all the major segments, including commercial vehicles and two-wheelers registering growth in sales. On the continued strong growth in the commercial vehicle segment, Mathur said that the high growth in the segment for many months in a row also indicates improvement in the economy. “Commercial vehicle sales is directly linked with the GDP growth,” he said. The constant high demand is due to the recovery in sectors like infrastructure and mining, he said.

With the forecast of a good monsoon, the industry is maintaining a positive outlook for the remaining part of the year. “Once the rural demand comes back, we will see some really strong growth,” Mathur said. He, however, added that the industry was still not close to the peak which it witnessed around 2012.

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