Tepid Sales In June Impact Automobile Sales in First Quarter Of FY2018

Owing to goods and services tax (GST) transition, sales of passenger vehicles in the first quarter of the FY2018 grew by just 4.18 per cent. Passenger vehicle sales dropped 11.21 per cent to 198,399 units last month as original equipment manufacturers (OEMs) realigned inventory across dealerships to avert losses during the transition to the GST.

Similarly, two two-wheeler sales in the month under review went up by only 4 per cent to 15,27,049 units while commercial vehicles grew marginally by 1.4 per cent to 56890 units last month.

In the passenger vehicle (PV) segment, domestic sales of high growing Utility vehicles (UVs) segment grew by 7.53 per cent at 190,098 units in the first quarter while demand for cars saw a marginal growth of 3.89 per cent at 494,313 units in the same time period.  

“There was a lot of confusion in the market regarding the prices of vehicles when GST will come into place. OEMs and dealers wanted to minimise their losses and liquidate the stock. All these factors let led to lower dispatch from factory to showrooms in June and it eventually impacted first quarter sales,” Sugato Sen, ‎Deputy Director General at society of Indian automobile manufacturers (SIAM) said.

Contrary to PV sales, two wheeler domestic sales grew by 7.78 per cent at 4.896,170 units in the first quarter. Scooter continued string double digit growth and grew by 20.06 per cent at 1,647, 690 units in the same period. Motorcycle sales, which saw maximum blunt of demonetisation in the Q3 and Q4 of FY2017 made a comeback and grew by 3.44 per cent. Total motorcycle sales stood at 3,054,987 units in Q1 of FY2018 as against 1,953,316 units in Q1 of FY2017.

Sen said that improved rural sentiment on the back of good monsoon improved two-wheeler sales. “We believe that scooter segment will continue to outrun motorcycle segment. The growth ratio between scooter and motorcycle will remain 3:1 in FY2018.

On the poor demand for medium&heavy commercial vehicle, Siam said that the segment is subjected to cyclic demand. “Pre buying which took place in March when companies offered big discount on the BS-III stock and cyclic fall in demand will impact M&HCV sales in coming quarters,” Sen added.

M&HCV sales in the first quarter degrew by 31.82 per cent at 48,493 units in Q1 of FY2018 as against 71,122 units in the same period last year.