Passenger vehicle sales decline 5.6% to 3-month low in September

New Delhi: Passenger vehicle sales fell 5.6% year-on-year (YOY) to 292,658 units in September as buyers held off on purchases of sports utility vehicles because of rising petrol and diesel prices, along with a high base from the slightly earlier Navaratri festival last year. Increases in insurance premiums for automobiles also impacted two-wheeler sales across the country, according to data released by the Society of India Automobile Manufacturers (SIAM).

Passenger car sales declined by 5.5% YOY to 197,124 units to hit a three-month low while those of sports utility vehicles —the volume driver of the whole passenger vehicle segment—declined substantially by 8.2% YOY to 77,378 units.

According to Rajan Wadhera, president, SIAM, the decline in sales of passenger vehicles is due to the rise in crude prices. Also last year Navratri festival fell in September which increased the base for the corresponding period.

“We expect the passenger vehicle sales to grow in the second half of the fiscal on the back of a good festive season. We also expect that passenger vehicle sales will match our growth outlook of 9-11% by the end of the year,” added Wadhera.

On the back a continued government focus on improving the road infrastructure and the rural sector, sales of commercial vehicles increased by 24.1% year-on-year to 95,867 units.

Medium and heavy commercial vehicle sales—an indicator of economic activity— increased by 25.9% YOY to 39,208 units during the month while the same for light commercial vehicles also increased by 22.9% YOY to 56,659 units.

Higher insurance premiums and slowdowns in sales in Kerala and West Bengal impacted two-wheeler sales in the country. Overall, two-wheeler sales increased by 4.1% YOY to 2,126,484 units, while sales of scooters declined by 2.9% YOY to 666,476 units. On the back of a revival in the rural economy due to near normal rainfall and increased minimum support price for agricultural produce, motorcycle sales grew by 7% YOY to 1,360,415 units.

“Our outlook is very positive for the rest of the year and given the way the Union government is investing in improving road infrastructure across the country, it will be good for the auto industry. Crude prices though should not move fast as it impacts the customer sentiment,” said Wadhera.