Auto sector clocks robust 26% growth in August

Growth led by passenger vehicles and two-wheelers

The passenger vehicle (PV) and two-wheeler segments of the automobile industry have reported strong double-digit growth in August.

This indicates a strong revival in demand, backed by improved rural sentiment and improving urban demand due to increase in wages of government employees.

According to data from the Society of Indian Automobile Manufacturers (Siam), domestic sales of PVs (cars, utility vehicles and vans) grew 16.7 per cent from a year earlier, helped by strong performance from Maruti Suzuki, Mahindra, Toyota and Renault. Companies have stepped up wholesale dispatches to stock dealerships, to meet the festive demand. Sales in the April-August period, first five months of the financial year, have improved by 11 per cent. Sales growth in September and October are expected to be higher.

Sales of two-wheelers rose 26 per cent. Within the segment, motorcycles (the bulk) volume grew 22 per cent; scooters grew by 34 per cent. A normal monsoon is helping, especially in motorcycles, where volumes did not grow for two years. All the top three two-wheeler companies — Hero MotoCorp, Honda Motorcycle & Scooter India and TVS Motor — reported double digit growth in volumes. April-August sales of the industry went up by 16 per cent.  

“The revival trend has strengthened. The rural buyer appears to have come back in the market and its impact is being seen in cars, two-wheelers and light commercial vehicles,” said Vishnu Mathur, director general at Siam.

The decline in sales of medium and heavy commercial vehicles (CVs) has continued. Within the segment, goods carriers declined 18 per cent to 16,437 units. However, passenger carriers grew 35 per cent to 4,100 units. Mathur said strong fleet replacement demand was driving growth and demand had been met. “This demand might come again, later this year.”

Sales of light CVs grew 11 per cent in August to 32,459 units. Goods carrying LCVs grew 12 per cent to 28,635 units, while passenger carriers grew six per cent to 3,824 units.   

Industry sales to dealers have increased significantly, to cater to increased consumer demand for PVs and two-wheelers over the next three months of the festival season. “The growth in cars and two-wheelers is backed by many positive factors, such as a good monsoon which will result in increased rural demand, overall positive customer sentiment, better cash flows in the hand of the consumers such as government employees due to the pay commission hike and  some new launches,” said Abdul Majeed, partner at Price Waterhouse. Overall industry sales (all vehicles) grew a little over 26 per cent to 16,48,883 units in August.