Kerala floods impact: Passenger vehicle sales dip over 2% in August

In a month when all segments of the domestic automobile industry posted growth, the passenger vehicle (PV) segment (cars, utility vehicles, and vans) declined by more than 2 per cent in August because of Kerala floods and heavy rainfall in some of the states. A high base effect of last year also showed on the performance. August is a month of good growth in dispatches from manufacturers to dealerships as companies build stock with dealers for the festive season demand. 

Data released on Tuesday by Society of Indian Automobile Manufacturers (Siam) shows that the domestic volume of passenger vehicles declined 2.46 per cent in August to 287,186 units. Within the PV segment, cars showed a per cent decline while utility vehicles declined by 7 per cent. Vans, the smallest sub-segment in PVs, posted growth of 2.41 per cent. 

Maruti Suzuki and Hyundai, the top two manufacturers, reported a decline of 3 per cent in domestic sales. With a pickup in festive sales beginning with the Ganesh Chaturthi on September 13 and extending to Diwali in November, the industry is confident of recovering the August sales loss. “There is an impact of high base effect, as sales last year from July to September were high after goods and services tax (GST) implementation,” Vishnu Mathur, director general of Siam, said. Besides, there is also some impact of floods, especially in Kerala, which is a big automotive market, he said.

Two-wheelers, the biggest segment of the domestic automobile industry by volume, reported growth of 3 per cent to 1.94 million units. Even as scooters had a flat month, motorcycles grew by more than 6 per cent to 1.2 million units, showing the impact of a rural demand surge. Scooter volume slipped 0.60 per cent to 669,416 units. “Two-wheeler sales were partially affected by the restriction imposed in West Bengal on new purchases without driving licence,” Mathur said. 

Both three-wheelers and commercial vehicles continued their double-digit growth in August as well. Three-wheeler volumes expanded 23 per cent in August to 63,199 vehicles. Siam said sales of commercial vehicles jumped by 29.56 per cent to 84,668 units in August as against 65,350 units in the year-ago month.

“Considering how this segment has grown above expectations, we are looking at having a re-look at our forecast for an upward revision,” Siam Deputy Director General Sugato Sen said. The apex body had earlier projected the CV segment could grow around 10-12 per cent this fiscal year. However, in the April-August period, the segment has grown by 41.67 per cent to 391,260 units, making it re-look at the projections.

"The commercial truck segment has been performing at a high torque during this month despite the change in the axles' policy, kicking in mid-July and presume it is not only because of the shape of the economy but also a reflection of the infrastructure build. The PV segment had a mixed performance. While a few players have shown growth, the largest players have shown a negative growth, possibly due a high base in previous year, high interest rates, and flood situations, which have had its dampening effect," said Sridhar V, partner, Grant Thornton India.