Inventory corrections and the Jat quota protests in Haryana led to a decline in domestic passenger car sales to a little more than 1.64 lakh units in February, against 1.72 lakh units in the same month last year, the latest report shared by the Society of Indian Automobile Manufacturers (SIAM) said on Thursday.
“The Jat agitation had an impact on the industry, especially on market leader Maruti Suzuki’s dispatches. There were also inventory corrections by some of the auto manufacturers,” said Sugato Sen, Deputy Director General.
Also, some dealers did not pick up stocks ahead of the Budget as they were expecting some reduction in excise duties that would have affected prices differently, he said.
Sen said this month, too, the industry expects lower sales because of the price increases that have happened after the budget.
Instead of reducing excise duties on passenger vehicles, an infrastructure cess of 1-4 per cent was imposed on different categories of automobiles, besides collection of tax at source at the rate of one per cent on purchase of cars exceeding ₹10 lakh.
Because of this, car companies announced price hikes between one and four per cent, passing the burden on to the customers.
However, two-wheeler sales — scooter and motorcycles — improved and are expected to do well in the coming months.
Motorcycle sales in February grew 11.04 per cent to around 8.60 lakh units, compared with 7.74 lakh units in the corresponding month last year. Similarly, scooter sales grew 18 per cent to 4.36 lakh units last month, against 3.70 lakh units in February last year.
According to analysts, two-wheeler sales increased and hopefully the recent Budget announcements will create more demand in the rural economy.
“Factors, such as better monsoon, ease in liquidity and expected reduction in interest rates coupled with rise in rural demand should help the growth in the motorcycle sales,” said Abdul Majeed, Partner at Price Waterhouse.
With the improvement in the economy, commercial vehicles — light, medium and heavy vehicles — are expected to continue the growth momentum, said experts.