Car sales growth for FY15 is likely to be below 5% despite initial enthusiasm that the market will bounce back strongly after two years of sluggish sales, the Society of Indian Automobile Manufacturers (SIAM) said on Monday.
The industry body had previously given a more optimistic target of around 10% on the back of improving consumer sentiments and hopes of a sustained macroeconomic recovery after the Narendra Modi-led NDA government came to power at the Centre in May. The modest growth target comes on the back of disappointing passenger vehicle (PV) sales in October, a festival month that included both the auspicious Navratras and Diwali, when consumer spending usually increases.
“We might see some revival in sales early next year, but the passenger vehicle segment and passenger cars are expected to grow at sub-5% this fiscal. Festival season has been subdued and unless we have some real economic growth, we might not see automobile sales going up,” said Siam deputy director-general Sugato Sen.
Volumes of PVs, which include cars, utility vehicles and vans, fell 7.5% in October after five straight months of growth while car and UV sales dropped 2.5% and 15%, respectively. Since May this year, PV sales had started recovering from their decade-low, posting some growth every month.
Gaurav Vangaal, senior analyst for light vehicle forecasting at IHS Automotive, said: “There was an inventory pile-up with car dealers till September. So, with lower production days in October because of sveral holidays, automakers were able to control stock in the pipeline.”
During the month, new launches helped market leader Maruti Suzuki, Hyundai and Honda record volume growth of 1% (97,069 units), 5.6% (38,010 units) and 18% (13,242 units). However, Mahindra and Tata Motors saw a drop of 20% (20,255 units) and 33% (13,665 units).
Two-wheelers sales also came as a surprise, posting their first drop in several months (down 3.6% to 14.61 lakh units). Scooters continued to do well with 11% growth (though lower than 20-30% of the previous months) while motorcycle sales fell 9%. Hero MotoCorp saw sales drop 10% to 5.50 lakh units while Honda saw flat sales. Bajaj also saw an 11% drop though TVS Motor saw an 18% jump in volumes.
The silver lining, however, was the medium and heavy truck segment, whose sales rose 25% to 17,866 units on the back of a pick-up in economic activity and lower diesel prices. India’s truck market, which has contracted by 40% in two years, is now making a comeback. However, light commercial vehicle sales fell 13% to 34,099 units, dragging CV sales 3% to 51,965 units.
During the month, Tata Motors CV sales were down 5% to 25,095 units while Ashok Leyland saw 26% growth.