Passenger vehicles sales take a hit in July: SIAM

Unable to maintain the growth momentum, the domestic passenger vehicles segment—which includes cars, utility vehicles and vans—posted a surprise dip of 2.71% in July, according to data from the Society of Indian Automobile Manufacturers (SIAM) released on Friday. The month, however, proved to be a good month for commercial vehicles and two-wheelers, which registered a growth of 29.65% and 8.17%, respectively, over the corresponding period last year.

Passenger vehicles saw sales dip to 290,960 units in July from 299,066 units sold in the corresponding month in 2017. Even domestic cars, an otherwise well-performing segment, took a hit of 0.45% from 192,845 units in July 2017 to 191,979 units last month. Passenger vehicle exports also suffered a dip of 5.90%.

According to auto analysts, the fall in sales was because of a favourable base last year in anticipation of the GST.

“In July last year, companies were refilling the entire stock—from factory to dealers. In June last year, everybody was clearing their stocks and production was getting affected. There was no production in the last week of June because they were clearing their stocks. In July, they had to refill the complete pipeline again with the new tax regime and saw strong sales,” said Gaurav Vangaal, senior auto analyst at global consulting firm IHS Markit.

In the coming months, he expected growth to slow down, compared to the first half of the year, he said, adding: “Growth will continue but won’t be phenomenal.”

Overall, industry sales grew at 7.97% from 2,079,204 units in July 2017 to 2,244,875 last month. The major driver for this growth was the three-wheeler segment—which includes both passenger and goods carriers—which grew 46.24% to 60,341 units from 41,261 in the year-ago period.

Total exports also rose 26.01%, while total production grew at 17.12% in July, compared to last year.

In its outlook for FY19, SIAM expects GDP growth to revive—boosted by impressive growth in the manufacturing sector, an increase in government spending to revive growth, and with a normal monsoon expected to boost rural demand.

“GDP is estimated to grow at 7.5% in FY19 and is expected to be mildly supported by public spending (with a rural focus) in infrastructure, especially roads,” SIAM said in its report.