Automobile sales show mixed trend in May

The month of May saw mixed trend in automobile sales with the passenger car segment registering a growth and motorcycles and three-wheelers reporting a fall on year-on-year (YoY) basis.

According to the latest data released by the Society of Indian Automobile Manufacturers (SIAM), total sales of overall category of vehicles fell marginally (-0.57) during the month because of a mixed trend.

Passenger car sales grew around eight per cent to 1.60 lakh units during the month against 1.48 lakh units in corresponding month last year. Total passenger vehicle sales rose to 2.18 lakh units (2.08 lakh units).

Monsoon movement The industry is on a recovery path and expected a better growth than earlier months, Vishnu Mathur, Director-General, SIAM, told reporters here. He, however, said the proper trend would be seen depending on the monsoon this year, as it is still scarce in many States.

“Currently, we are in a slow recovery mode, with some segments showing growth and some declining. Even those segments like cars, which have shown growth, haven’t reached peak levels,” he said.

According to analysts, conditions for demand growth seem to be getting built. Typically, the urban demand for cars is supported by the growth of disposable income being significantly higher than the growth of inflation, they said.

“At this point, this may be true. What is critical would be the extent to which this is sustained — while inflation may stay low, salary growth will happen if jobs are created,” said Kumar Kandaswami, Senior Director at Deloitte India.

Household savings The other variables that come into play are the household savings that the potential car buyers will want to take back to the levels they were at in the high growth years and the ability of the potential customers to accept the varying fuel prices, he said.

However, falling motorcycle sales may continue in the near future as there is not much hope for growth from the rural areas. Motorcycle sales continued to fall during last month at 9.53 lakh units (9.83 lakh units).

“Any rural slowdown will impact some manufacturers more than the others, given the nature of the portfolio and the strength of distribution. Typically, the products that will get impacted are the entry level hatchbacks in passenger cars and SUVs and the economy motorcycles,” said Kandaswami.

And, because of the impact in sales of motorcycles, the overall two-wheeler sales also declined YoY during May.