Passenger vehicle sales continue to rise for 7th month, up 5%

The sale of passenger vehicles increased by nearly five per cent in May, registering growth for a seventh month in a row, data from industry body Society of Indian Automobile Manufacturers (Siam) showed. A growth of 4.7 per cent in May, however, compared unfavourably with April, when it grew by 16 per cent. The sequential growth in May vis-à-vis April was flat.

Passenger vehicles comprise cars, utility vehicles and vans. Cars form the bulk of the segment. A total of 1,60,067 cars were sold in the domestic market in May, up eight per cent from same month last year. Utility vehicles and vans declined by 2.3 per cent and five per cent, respectively. The growth in passenger vehicles for first two months of the year (April-May) was 10 per cent.

Siam director general Vishnu Mathur said the growth is not broad based in the passenger vehicles space and only three to four players are driving numbers. "Recovery process will be robust when growth becomes broad based," he said. May numbers were driven by robust sales from Maruti Suzuki and Tata Motors.

Fuel prices have started moving northward on weakening rupee and firming up of global prices. In May, petrol price went up by 10.7 per cent to Rs 66.29 a litre (in Delhi) while diesel firmed up by 10.7 per cent to Rs 52.28. Fuel prices influences purchase decisions to some extent. Kumar Kandaswami, senior director, Deloitte, said the conditions for demand growth seem to be getting better. "What is critical would be the extent to which this is sustained. Any rural slowdown will impact some manufacturers more than the others, given the nature of the portfolio and the strength of distribution. Typically, the products that will get impacted are the entry-level hatchbacks in passenger cars, sport utility vehicles and economy motorcycles," he said.

An impressive performance has been registered by the medium and heavy commercial vehicles, the segment now reporting a high growth for the tenth month in a row.

Volumes increased 24.4 per cent in May, helped by mining and industrial activity. The light commercial vehicle segment continued to decline, reporting a drop of seven per cent in May.