Analysis: Half Yearly Sales For Passenger Vehicles And Two-Wheelers

The Indian Automotive Industry's output in the Apr-Sept 2016 period stood at 13,421,500 vehicles - and that includes passenger vehicles, commercial vehicles, two-wheelers, three-wheelers and quadricycles, that is a year-on-year growth of 11.92 per cent. Passenger vehicles grew faster than the industry average at 12.34 per cent year-on-year in the same period.
1. Summary Report For Production, Sales and Exports of Passenger Vehicles (April-September, 2016)

2. Summary Report For Production, Sales and Exports of Two-Wheelers (April-September, 2016)

A thorough look at the tables above tells you that barring two wheeler exports, the Indian automotive market has begun driving out of the tough times seen over the past 3 years.

Outlook for Passenger Vehicles:

The Society Of Indian Automobile Manufacturers or SIAM is positive the automotive market will continue with this positive growth. It estimates that the second half of the year will also bring double-digit growth - at about 10 per cent. A reason the growth is being pegged lower than the first 6 months is the high inventory build-up in Q2 for the festive season. The growth in Q4 is also expected to be moderate, as customers will be anticipating a drop in prices with the implementation of GST. SIAM believes vehicle prices will not alter by a large margin.

(Passenger Vehicle Sales expected to have a growth)

Outlook for Two-Wheelers:
SIAM expects motorcycles to have a good overall growth for 2016-17, thanks to a successful rabi crop and a good monsoon. Now the expectation is that rural demand will remain vibrant as the kharif crop is also expected to be healthy.

Vishnu Mathur, director general, SIAM, said "As the rural economy starts looking up, bolstered by the good monsoon and an overall revival of the rural sector, the sales of two wheelers, specially motorcycles and small cars is likely to gain momentum in the coming months."

(Two-wheelers sales to see a growth as well in the coming months)

The 7th Pay Commission is expected to boost sales as well. And so it looks like the auto industry is finally looking healthy again. With growth settling and the expectation that macro economic factors will likely improve, the only fear would be fuel prices and interest rates, which analysts are now going to watch even more closely.

A quick take on the sales of commercial vehicles is that there is a certain confusion prevailing in the minds of the HCV customers especially. Vishnu Mathur explains the same saying, "One of the reasons why HCV sale is down could be due to the confusion prevailing in the minds of the customers due to the April 17 date of implementation of BS IV which is likely to increase the costs of CVs and also the same date for implementation of GST which may result in reducing the costs. However, in case there is any substantial pre-buy before April 17, then the first a few months of the next fiscal may see a decline in sales of CVs once again. With the waning replacement demand for HCVs, the future demand for HCVs will depend more on economic growth and real activity in the core sectors like Mining, Infrastructure etc".

(Data Courtesy: SIAM)