Indian passenger vehicle industry is expecting a lower growth during the second half of this fiscal.
"In the first half, growth has been 12 per cent and we expect second half growth to be around 10 per cent. This is due to high inventory build up in Q2 for the earlier festive season. We expect slight correction in Q3 and moderate growth in Q4 on account of GST, according to information provided by SIAM (Society of Indian Automobile Manufacturers).
Growth in Q4 is expected to moderate due to postponement in demand (to Q1 FY18), in anticipation of lower prices in Q1 FY18 owing to GST implementation. However, it is important to monitor actual implementation of GST and its impact on Q4 inventory.
SIAM indicated that there was concern regarding inventory being carried forward from March to April 2017, dealers stand to lose on the excise duty paid on March stock.
On the sales trend, it pointed out that stronger demand shift was being witnessed from A3 to B – utility vehicle segment.
Amid slowdown concerns due to GST, the industry expects 7th pay commission bonanza to provide a boost to consumer spending.
It will positively impact passenger vehicles and is also expected to propel replacement of cars bought five years back during the 6th pay commission payouts.
During the first half of this fiscal, car sales grew by five per cent at 1.02 million units, while utility vehicle volumes reported a whopping growth of 40 per cent at 3.73 lakh units. Sales of vans grew by eight per cent at 94,009 units.