Fading Demonetisation impact, monsoon pushes up August car sales

Fading impact of demonetisation and healthy monsoon rains accelerated domestic passenger cars sales in August, industry data showed on Monday.

As per the Society of Indian Automobile Manufacturers (SIAM) data, passenger cars sales increased by 11.80 per cent in August to 198,811 units from 177,829 units sold in the corresponding period of last year.

The off-take of other sub-segments such as utility vehicles zoomed up by 19.62 per cent during the month to 78,664 units, while sales of vans rose by 11.30 per cent to 16,860 units.

Industry data revealed that the overall domestic passenger vehicle sales edged higher by 13.76 per cent in August to 294,335 units from 258,737 sold during the corresponding period in 2016.

“In terms of passenger vehicles and two-wheelers this basically implies that rural demand is back after the impact of demonetisation… monsoon has been good and the impact of demonetisation is wearing off so that we are seeing the industry bouncing back in the month of August,” said Vishnu Mathur, Director General of SIAM.

The overall commercial vehicles’ sales recorded healthy growth last month. It rose 23.22 per cent to 65,310 units in August. The segment is a key indicator of economic activity.

The three-wheelers segment’s off-take increased by 2.51 per cent to 51,451 units during the month under review.

Besides three-wheelers, the overall sales of two-wheelers, which include scooters, motorcycles and mopeds, increased by 14.69 per cent to 1,891,062 units.

Similarly, the industry data showed that the Indian automobile sector’s sale rose by 14.49 per cent in August 2017 — with total sales at 2,302,158 units across segments and categories.

The overall exports across categories increased by 7.24 per cent to 332,533 units during last month.

Sector analysts observed that after “good growth” across segments in July 2017 on back of lower GST rate as well as positive sentiments coupled with fading of demonetisation impact, the August 2017 sales reflect a mixed bag.

“Segments like commercial vehicle and two-wheelers continue to grow on back of positive sentiment… passenger cars got impacted due to uncertainty in GST cess,” said Abdul Majeed, Partner, Price Waterhouse.

“GST council has taken mid-path for overall increase of cess on bigger vehicles including SUV, growth looks positive for automotive industry this year. Luxury and bigger vehicles will have normal growth as opposed to significant growth as expected due to higher GST rates.”

Sridhar V, Partner, Grant Thornton India, said: “Auto sales have been encouraging across segments due to post-GST pricing, money in the hands of customers arising out of Pay Commission revision, more demand for BS-IV vehicles and good monsoon resulting in increase in rural demand.”

“The more encouraging results are in the commercial vehicles which is very impressive… There could be a slight setback on passenger vehicles in the ensuing month after introduction of the additional cess, while festival season is expected to perk up the demand.”

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