New Delhi: Sales of passenger vehicles grew the fastest in four months in January with consumers appearing to have shrugged off the impact of demonetisation. Sales of two- and three-wheelers, however, continued to decline.
Sales of passenger vehicles, including vans, cars and utility vehicles, in January grew 14.4% from a year ago to 265,000 units, according to data compiled by Society of Indian Automobile Manufacturers (Siam). The segment grew 19.9% in September.
Sales declined across all other segments for the second month in a row. Two- and three-wheeler sales, which happen mostly through cash transactions, continued to reel from the impact of the invalidation of older high value currency notes in early November.
Two-wheeler sales declined 7.39% to 1.26 million while those of three-wheelers declined 28.2% to 31,345 units. Sales of commercial vehicles fell 0.72% to 61,239 units.
Siam expressed hope that the impact of demonetisation would be over in a couple of months.
“Demonetisation impact is over in the passenger vehicle segment at least. It has the potential to reach double digit growth this fiscal,” said Vishnu Mathur, director general, Siam, adding that same may not be true for the overall industry. In the 10 months to 31 January, sales of passenger vehicles have grown 9.17% to 2.5 million units over the same period in 2015-16.
“For the overall industry to grow at 10%, two-wheeler industry will have to pick up,” Mathur said.
To be sure, the numbers are wholesale figures—company dispatches to dealerships—and not sales to end-users.
Abdul Majeed, partner and national auto practice leader, PwC attributed the increase in passenger vehicle sales in January to increase in dispatches to dealers of new models that have a waiting period. “The two wheeler and commercial vehicles segment has reduced growth due to the impact of demonetisation, especially in the rural markets,” he added.
Majeed said customers are still cautious about buying new vehicles given uncertainties over economic growth.
“This quarter will be challenging for the overall growth of the automotive industry, but growth is expected to pick up in the third quarter of 2017,” he added.