Auto industry gains traction ahead of the festive periodAuto industry gains traction ahead of the festive period

Auto industry gains traction ahead of the festive period

It couldn’t be a better month for the automotive industry, with growth of passenger vehicles hitting the highest mark in the past nine months during July, rising 17 per cent with utility vehicles continuing their sprint on a 42 per cent gain last month.

Other segments also posted robust numbers. A 13.52 per cent growth in two wheelers boosted fortunes in the domestic market, while three wheelers grew 2.10 per cent and commercial vehicles remained flat.

SIAM is yet to alter its 6-8 per cent forecast of passenger vehicle growth for the fiscal, but said boosted sales could take sales to double-digit levels. “We were anticipating a growth of 6-8 per cent for passenger vehicles this year. It may be better than that as sentiments have improved due to factors like good monsoon and the implementation of the seventh pay commission benefits that should reign in some positive changes to the market,” said Sugato Sen, SIAM’s deputy director.

Beating SIAM forecast, passenger vehicle sales grew 9.23 per cent in the April-July period. Within the passenger vehicles – cars, utility vehicles and vans – grew by 1.36 per cent, 39.03 per cent and 7.72 per cent respectively during April-July 2016 over the same period last year.

The two wheeler market that is under pressure for the last two years grew by 13.5 per cent last month, indicating a positive response from the rural market that fetches almost half of the sales for the segment. For the first time in the two-wheeler segment, motorcycles posted a double digit growth of 11 and scooters grew 16 per cent last month. A surplus rainfall this year is expected to drive sales across the segment especially motorcycles, which form bulk of two wheeler sales.

Analysts tracking the automotive market say growth in motorcycle sales indicate an uptick in rural demand and gradually, cars will also benefit. “Market is changing with better rainfall and the onset of the festive season. We have not witnessed a cracker of sales, but the sluggish period seems to be quite over,” said Abdul Majeed, analyst and partner with Price Waterhouse, a multinational consultancy.

Some inconsistencies were witnessed in the heavy commercial vehicle market. The medium & heavy commercial vehicles declined 7.61 per cent last month due to lower replacement demand. Small commercial vehicles are finally showing growth mainly due to higher intra-city traffic and posted a 6.3 per cent growth in July.