Auto sales flat in Feb after note ban impact wanes

Two-wheelers pulled down automobile sales in February to less than one per cent although passenger and commercial vehicles grew at seven and nine per cent, respectively.  

This was an improvement after three months of declines in automobile sales since demonetisation was announced on November 8.

Sales of cars, utility vehicles and vans rose to 255,359 in February. “We are now witnessing steady recovery. The impact of demonetisation is waning and we expect the effects to fade away in the next two months," said Vishnu Mathur, director-general of the Society of Indian Automobile Manufacturers. 

The growth in passenger vehicles sales was led by Maruti Suzuki, Tata Motors, Toyota and Honda. The segment grew 9.16 per cent in April-February. 

Commercial vehicle sales rose in February after a dip in January. Sales of light commercial vehicles (LCVs) grew by 9.3 per cent and those of medium and heavy commercial vehicles (MHCVs) by five per cent. Three-wheelers, however, remained under pressure in February with sales declining 21 per cent to 35,356. 

Sales of two-wheelers, which constitute 80 per cent of the automobile industry’s volumes, were flat in February after three months of declines since November. Motorcycle sales, which rely heavily on rural demand, declined over three per cent in February while scooter sales grew 3.7 per cent. 

“The impact of demonetisation is still being felt in rural markets. Pre-buying due to BS IV norms effective from April 2017 is helping the growth of sales of commercial vehicles,” said Abdul Majeed, partner at PwC. 

Against 16 per cent growth in two-wheeler sales in April-October, the rate has fallen to under eight per cent in April-February. Two-wheeler sales had grown three per cent in 2015-16 as deficit monsoon rainfall weighed upon rural purchases. With better rainfall and revised wages of government employees, companies were hopeful of double-digit sales growth in 2016-17.