Auto sales decline for second straight month2 min read . Updated: 11 Sep 2018, 11:38 PM IST
High base effect, muted demand amid Kerala floods weigh on automakers
New Delhi: Passenger vehicle sales fell for the second straight month in August primarily because of a high base and muted retail demand amid devastating floods in Kerala.
Sales declined 2.46% from the corresponding period to 287,186 units, according to data issued on Tuesday by the Society of Indian Automobile Manufacturers (Siam), an industry lobby group. Domestic passenger vehicle sales had fallen 2.7% in July.
Auto makers replenished stocks at dealerships after the implementation of the goods and services tax (GST) last year but delivered fewer vehicles to dealerships in August this year.
Automobile sales in India are counted as factory dispatches and not retail sales. Domestic car sales declined 1% in August to 196,847 units from the corresponding period, while sales of utility vehicles dropped 7.1% to 73,073 units, according to Siam.
“Last year, in the July to September period, vehicle sales were very good as tax rates had come down after the introduction of GST," said Vishnu Mathur, director general of Siam.
“Then, in expectation of a rise in tax rates, there was pre-buying as well in September last year. So, I don’t think there will be enough growth in September because of the high base effect," he said.
Total automobile sales in the country grew a marginal 3.4% from the year earlier to 2.38 million units in August.
Sales of two-wheelers also remained muted in August because of the high base effect and weak consumer demand because of the floods in Kerala and some other states, as well as policy changes in West Bengal, said Mathur.
Total sales of two-wheelers rose by a marginal 2.9% year-on-year to nearly 1.95 million units in August. Sales of scooters fell 0.6% last month to 669,416 units while motorcycles recorded a 6.1% rise to 1.2 million units.
“The adverse policy changes in West Bengal have brought the sales of two-wheelers down to just 38,000 units this month from the average of 90,000 units every month. Sales in Kerala were down as well because of the floods. Hence the muted growth in the segment but it will pick up next month at least in West Bengal," said Mathur.
Motorcycles sales have been growing at a healthy pace on the back of two consecutive years of near normal monsoon rains. This year, too, motorcycles are projected to do well as rainfall during the monsoon season has been quite good and this will likely have a positive impact on crop output and rural incomes.
Commercial vehicle sales, however, continue to grow in double-digits as wholesale volumes during the month climbed 30% year-on-year to 84,668 units.
On the back of the Union government’s continued thrust on building infrastructure and improving economic activity, sales of medium and heavy commercial vehicles grew 28.5% on-year to 34,072 units in August. Sales of light commercial vehicles increased 30% year-on-year to 50,596 units during the month.