Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsPassenger vehicle sales in India jump 16.8% y/y in July, CV sales growth moderates further
Utility vehicle volumes continued to grow, and sales of cars and vans also rose in July.
HS Automotive perspective
- Significance: Passenger vehicle sales in India grew a solid 16.8% y/y during July to 259,685 units, according to data from the Society of Indian Automobile Manufacturers. Commercial vehicle sales growth further moderated to just 0.1% y/y, with monthly volumes standing at 51,853 units.
- Implications: July was only the second instance of monthly car sales rising y/y this year, and it is too early to say if the segment is out of threat from compact SUVs.
- Outlook: In its latest policy announcement, India's central bank left the interest rates unchanged, although good rainfall so far this season may have set the stage for better affordability and sales in rural and semi-urban markets next year. We expect light vehicle sales in India to grow 5.35% this year to 3.31 million units.
Passenger vehicle sales in India returned to double-digit percentage growth in July as monthly volumes surged 16.8% year on year (y/y) to 259,685 units, according to data released by the Society of Indian Automobile Manufacturers (SIAM). Sales volumes were led by cars, which sold 177,604 units, reflecting a gain of 9.6% y/y. Utility vehicle sales surged 41.9% y/y to 64,105 units. Shipments of vans also improved 18.6% y/y to 17,976 units in the month. Passenger vehicle sales for the first seven months of 2016 stood at 1.67 million units, marking a growth of 6.2% y/y.
In comparison, commercial vehicle (CV) sales continued to moderate during July and monthly volumes expanded just 0.1% y/y to 51,853 units during July. This was split between 21,307 medium and heavy commercial vehicles (MHCVs; down 7.6% y/y) and 30,546 light commercial vehicles (LCVs; up 6.3% y/y). The slowing momentum for both categories trimmed year-to-date (YTD) growth to 14.4% y/y while sales volumes stood at 422,716 units.
Total industry volumes (TIVs) during the latest month rose a robust 13.6% y/y to 311,538 units. TIVs for the first seven months of 2016 were therefore up 7.8% y/y to 2.1 million units. It is worth highlighting that the sales figures reported by the SIAM represent dispatches by automakers to their dealers, rather than retail sales.
Production, exports also move up
In line with the robust sales performance in the local market, production and export volumes were also up in July. Passenger vehicle output grew by 5.9% y/y to 325,541 units during the month, while CV production expanded 6.3% y/y to 63,115 units. Meanwhile, passenger vehicle exports rose 3.2% y/y in July to 61,883 units and CV exports during the month gained 13.2% y/y to 10,205 units.
Outlook and implications
Passenger vehicle sales in July returned to double-digit percentage growth rates after two months. More importantly, this is only the second instance of monthly car sales moving up this year on a y/y basis. Despite cars being the largest constituent in passenger vehicle category, sales so far this year were driven by utility vehicles, highlighting the new-found preference among buyers for compact sport utility vehicles (SUVs).
With nine out of the top ten automakers posting y/y sales growth, July was easily the best month this year in terms of market-wide growth. Among specific automakers, Maruti Suzuki recovered from the plant maintenance and supply issues in the month. Although sales of its mini cars such as Alto and Wagon R continued to shrink, the new Vitara Brezza compact SUV and the Baleno hatchback lent support. Honda was the only automaker to post a sales decline in the month as it continues to struggle in a market where consumer preferences are changing in favour of gasoline (petrol) vehicles. Following the Supreme Court's conditional ban on certain diesel vehicles in the national capital region (NCR), consumers in other regions have also started preferring gasoline-powered vehicles.
For MHCVs, the weakness is a relatively recent phenomenon and is led by passenger carriers which tend to be cyclical in nature and has historically had a high correlation with government procurement. As a broad indicator of the health of local economy, growth in sales of MHCV goods carriers has come down reflecting last year's high base effect.
Above-normal rainfall so far this season has raised expectations of a fertile ground for vehicle sales in the remaining months of the year. Although the central bank did not reduce interest rates in its latest policy this month, affordability is on a relatively stronger footing in the urban markets while better monsoon is likely to offer the much-needed tailwinds to A-segment vehicles which have become popular in rural and semi-urban markets in recent years. We expect the light vehicle market to grow 5.35% this calendar year to 3.31 million units before returning to double-digit growth rates in subsequent years.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.