Indian Auto Industry Performance In The First Two Quarters Of 2017

The first six months of the 2017 have gone by in a flurry and it has been a rather tumultuous six months for the Indian automotive industry in at large, with implementation of the BS IV emission norms across the board and the ambiguous Goods and Services Tax or GST. The final quarter of financial year 2017 which consisted of January to March 2017 saw positive growth for passenger vehicles by 11 per cent. Approximately 8.03 lakh passenger vehicles were sold within this timeframe. In comparison, the sales figures for Q4 2016 were 7.23 lakh vehicles. The positive growth showed that the auto industry was successful in neutralising the challenge of demonetisation, which was implemented in November, 2016.

On the other hand, the two-wheeler sales for Q4 2017 saw slump of 2 per cent with sales of 40.96 lakh over the sales figures of Q4 2016, which were 41.93 lakh units. If we were to consider the entire FY 2017, there were a few landmarks as well, which bade well for the industry. The passenger vehicle sales crossed the 3 million mark for the very first time in India. The overall two-wheeler sales too stood at maximum with 17.6 million units sold. The industry was boosted by positive consumer sentiment as well. A Nielsen report on the same, said that India's consumer confidence rose to the highest level in 10 years at 136 points in quarter ending Dec 2016, despite demonetisation.

(Small cars got some benefit out of the implementation of GST)

Now, the first quarter of financial year 2018, which consisted of April-June 2017, saw the implementation of BS IV emission norms for all types of vehicles be it cars, commercial vehicles or two wheelers. The majority of the auto industry saw a boost in the form of the Goods and Services Tax, which led to many manufacturers dropping the prices of their models, especially in the premium segment even before the GST came into action. The overall passenger vehicles sales saw a growth of a modest 4 per cent with sales of 7.28 lakh units. Similarly, the two-wheeler sales grew by a decent 8 per cent, selling a total of 48.96 lakh units in the first quarter of financial year 2018.

(Two-wheeler sales saw decent growth in the first six months of 2017)

The Society of Indian Automobile Manufacturers or SIAM, is feeling positive about the remainder of the financial year 2018. The implementation of GST will make it easy to do business across all industries. Also, most manufacturers have dropped the prices of their models, thanks to GST and coupled with a favourable consumer sentiment. But all that might change as the GST Council might change the rates for high-end vehicles. It remains to be seen. Plus, the high rates on hybrid and electric vehicles haven't quite sat well with the industry, when the government would want to have a fully electric fleet by 2030. There are problems for sure, but one can always be hopeful.

Data Courtesy: SIAM