Car sales slide for fifth month in 2016, dip 0.8%

Most segments of auto industry report growth in May

Monthly sales of cars, which accounts for around 70 per cent of the domestic passenger vehicle (cars, vans and utility vehicles) market, declined 0.9 per cent in May. Cars have shown a decline in four of the first five months of 2016.

However, high double digit growth in sales of utility vehicles has come to the aid of the passenger vehicles segment. Riding on new launches and the expanding segment of compact utility vehicles, the UV segment grew 36 per cent in May.

Car sales declined year-on-year to 158,996 units in May. UV volumes rose 36 per cent to 58,793 units. Sales of vans too declined 3.4 per cent to 13,851 units. Overall, sales of passenger vehicles grew 6.3 per cent.

Vishnu Mathur, director-general of automobile industry body Society of Indian Automobile Manufacturers, said there have been some hiccups in sales of cars, but the decline has been made up by growth in UVs.

Over the past year, Hyundai’s Creta, Maruti Suzuki’s Brezza and M&M’s KUV100 and TUV300 have been launched.

Amit Kaushik, country head (India) for UK-based automotive consulting firm Jato Dynamics, said sustained growth is expected in passenger vehicles because of the strong demand for UVs.

“New launches will push growth. Besides, new products, positive sentiments, an improved macroeconomic environment and a better monsoon will support demand.”

Two-wheeler sales, too, saw significant growth, of 9.75 per cent in May, helped by a 25 per cent jump in scooter sales. Motorcycles saw a low single digit growth of 3.3 per cent. “Motorcycles are yet to pick up as rural demand has not come back. With a good monsoon projected for this year, growth should follow after August,” said Mathur.

In the commercial vehicle segment, both medium and heavy commercial vehicles (M&HCVs) and light commercial vehicles (LCVs) have reported high double-digit growth. Barring passenger carriers, which declined two per cent, all other categories in the segment witnessed double digit growth, and the M&HCV segment grew 21 per cent. Strong recovery has also been seen in the LCV space where both passenger and goods carriers showed strong growth of 13 and 14 per cent, respectively.

The overall industry (passenger vehicles, all commercial vehicles, two-wheelers and three-wheelers) grew 9.9 per cent in May.

“The automotive industry outlook for this financial year is good. Passenger car, utility vehicle, H&MCV, LCV, motorcycle and scooter segments’ volumes should grow this year,” said Abdul Majeed, partner at PriceWaterhouse.