The current financial year has started on a strong and promising footing for India’s vehicle makers, picking up from the acceleration seen in the March quarter of the last financial year.
April witnessed significant growth across all segments, with commercial vehicles (CVs) showing stellar growth from a low base on account of BS-IV transition.
Barring a few original equipment manufacturers (OEMs) in the passenger vehicle segment, all the major OEMs posted strong double digit YoY growth, says a report by brokerage Centrum Broking.
What helped CVs, especially medium and heavy vehicles (M&HCV) was a pick-up in infrastructure development, along with firm freight rates, ban on overloading in states such as UP and Rajasthan and mining-led demand.
Strong sales were reported by two-wheelers (2Ws) on the back of a revival in the rural economy and new launches, sales the report authored by Awanish Chandra and Vikas Rajpal.
The prospects look good for the auto industry, which was dragged down by a series of events like the demonetisation, transition to BS-IV emission standards and GST implementation.
The apex trade body of vehicle makers, the Society of Indian Automobile Manufacturers (Siam) also says the auto industry is poised to record high single digit growth in the passenger vehicle segment and double digit growth in the commercial vehicle segment, propelled by rural demand.
“During the last three-four years, the top 20 cities that contribute to about 50 per cent of the passenger vehicle sales have shown slow growth. But demand is now coming from smaller towns and semi-urban areas,” says Vishnu Mathur, director general of Siam.
Siam has forecast that the passenger vehicle segment will clock a higher single digit growth in FY19. “Sales of popular car models with substantial waiting periods will also support sales growth in 2018-19,” Mathur said.
The Centurm report said the passenger car market posted a slow growth of 4.9 per cent in but utility vehicles (UVs) continued the growth momentum and posted 11.9 per cent sales growth. Vans too continued its strong growth of 19 per cent. Overall the passenger vehicle (PV) segment’s performance was decent with a growth of 7.5 per cent, said the report.
In the M&HCV segment, passenger carriers (PCs) posted a good growth of 15 per cent after 12 months of declining, attributable to annual school season. M&HCVs goods carriers (GCs) saw a stellar growth of 214.6 per cent, thanks to the low base in April 2017, due to BS-IV transition. Overall MHCVs posted a 169.3 per cent growth in April. In light commercial vehicles (LCVs), PC and GC posted a strong growth of 30.2 per cent and 45.6 per cent, respectively. LCVs were up by 43.9 per cent. Overall CVs maintained a strong growth trajectory with a robust growth of 76 per cent.
Three wheelers (3Ws) reported a strong growth of 54.2 per cent on the back of 63.3 per cent growth in 3Ws –Passenger carrier segment. Along with low base effect, new permits opening in Maharashtra and other states like Delhi and Karnataka have led to a surge in domestic 3W sales. 3Ws–Goods carrier also posted a strong growth of 25.7 per cent.
Two-wheelers, the largest segment, posted a growth of 16.9 per cent. Scooters grew by 12.6 per cent, bikes by 19. per cent and mopeds by 16.9 per cent.
“Overall, Indian auto market posted a strong growth of 17.4 per cent as 2Ws (more than 80 per cent of the total sales) posted a growth of 16.9 per cent. All other segments also supported the overall growth,” says the Centrum report.
Exports kept up the growth momentum. PVs again declined by 15.9 per cent during April after a marginal recovery in March. PVs had posted a good export growth of 16.4 per cent in January after declining for five months. However, it had again declined marginally by 1 per cent in February.
CVs, whose 11th consecutive declining trend had got arrested in November 2017, maintained its growth trajectory with a strong growth of 52 per cent.
Both 3Ws and 2Ws maintained their recent growth momentum and grew by 88.2 per cent and 26.9 per cent, respectively. Overall, grand total of exports was up by 24.2 per cent.