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Customer LoginsIndian passenger vehicle shipments down, CVs up in September
IHS Markit perspective
- Implications The passenger vehicle segment continued its downward trend for a third consecutive month in September as volumes declined 5.6% year on year (y/y) to 292,658 units. Sale of commercial vehicles (CVs) jumped 24% y/y to 95,867 units.
- Outlook For 2018, IHS Markit expects car sales to remain at high levels. According to our data, Indian light-vehicle sales, including passenger vehicles and LCVs, is now projected to grow 9.9% y/y to 4.06 million units in 2018, while medium and heavy commercial vehicle (MHCV) sales will grow by 17.5% y/y to 421,397 units.
The Indian passenger vehicle segment continued its downward trend for another month in September as volumes declined 5.6% year on year (y/y) to 292,658 units, according to data released by the Society of Indian Automobile Manufacturers (SIAM). Within the segment, sales of cars and utility vehicles (UVs) declined while sales of vans improved. The largest category of the three sub-segments, cars, registered a 5.6% y/y decline during the month to 197,124 units, followed by utility vehicles, which saw a decrease of 8.3% y/y to 77,378 units. A total of 18,156 vans were sold during the month, up 7.3% y/y. Over the year to date (YTD), passenger vehicle sales were up 7% y/y to more than 2.6 million units.
Sale of commercial vehicles (CVs) witnessed another solid month in September with volumes totalling 95,867 units. This represents growth of 24% y/y, led by a surge in light commercial vehicles (LCVs) to 56,659 units, up 23% y/y. Medium and heavy commercial vehicles (MHCVs) also witnessed significant growth of 26% y/y to 39,208 units. CV shipments during the YTD period were up 35.2% y/y to 769,245 units.
Total industry volume (TIV) last month edged up 0.3% y/y to 388,525 units. In the YTD, automakers shipped a combined 3.3 million passenger PVs and CVs. SIAM's figures represent automakers' dispatches to their dealers, rather than retail sales.
Outlook and implications
Passenger vehicle sales declined for a third month in a row in
September mainly due to a high base effect. The corresponding month
of 2017 saw growth of nearly 10% y/y due to the impact of inventory
build-up for the festive season that had begun. At the same time,
buyers brought forward their purchases of luxury cars, SUVs, and
other bigger vehicles to avoid the goods and services tax (GST)
increase. Last month, other factors that dissuaded buyers include
higher fuel prices and interest rates while some purchases were
also deferred on expectation of updated models and price cuts
during the upcoming festive season. In the first nine months of
2018, Indian light-vehicle sales grew 12.4% y/y to more than 3.3
million units. The key reasons for the increase included new model
launches, lower finance rates, and increased production capacity,
all of which helped the industry grow at a high, double-digit
rate.
For 2018, IHS Markit expects Indian car sales to remain at high levels, in line with the 2018 budget in which the government increased customs duty on electronic components from 7.5-10% to 15%. The duty on completely knocked down kits has also been increased from 15% to 20%, alongside a 5% rise for completely built-up models. Therefore, all manufacturers in India are implementing price rises. Nevertheless, we will continue to see pent-up demand, high budget spending, new model launches, and favourable finance rates in 2018. During 2019, which is also an election year, we may see a rush in purchases before BS VI emission standards are implemented in 2020, and the market could record high, single-digit growth. In the long term, low penetration rates, the currency ban, and the government's efforts to implement GST, build smart cities, and revive key sectors (such as mining and infrastructure) should boost job creation. This will translate to more demand for the automotive sector.
According to our data, Indian light-vehicle sales, including passenger vehicles and LCVs, are now projected to grow by 9.9% y/y to 4.06 million units in 2018, while MHCV sales are forecast to increase by 17.5% y/y to 421,397 units.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.