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4 things to know about Indian automotive sales data
Auto sales saw a robust growth during Navratri and Dussehra - a period considered auspicious for purchases - according to the September data released by independent makers.
The sector rebounded despite hike in fuel prices and implementation of Goods and Services Tax (GST). Let's have a look at the sales data across each segment.
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Cars
Sales remained unaffected despite a cess hike on SUVs (sports utility vehicles), mid-sized, and large-sized cars.2 Besides the auspicious time to purchase cars, new product offerings and discounts were other reasons for the spike in sales.
Four of India’s top car manufacturers - Tata Motors, Maruti-Suzuki, Hyundai Motor and Honda - posted double-digit sales growth over last year.
The positive trend is likely to continue going forward, thanks largely to healthy demand and upcoming new products. -
Two-wheelers
The hike in petrol prices should have affected two-wheeler sales in India. That’s because they consume 60% of petrol in the country, according to Petroleum Planning and Analysis Cell. But, it didn’t.
In fact, more than 21 lakh two wheelers were sold in September 2017, an increase of ~10 % over last year. Bajaj Auto, TVS Motor and Royal Enfield saw double-digit growth in September4. The buoyant sales were not just limited to these three companies. Suzuki sold 57,469 units in September,5 while Hero MotoCorp dispatched 7.2 lakh bike units -- its highest ever sale. Honda Motorcycle & Scooter India also reported record sales. -
Commercial vehicles
GST failed to put a spanner in commercial vehicle sales either.
Piggybacking on the festive period, Tata Motors sold 29% more vehicles over September 2016. Ditto with VE Commercial Vehicles – a joint venture between Volvo and Eicher Motors. They saw a jump of 25.6% in their sales when compared to last year. Growing demand for new product launches, higher customer uptick and a ramp-up in BS-4 vehicle production were other key reasons for the growth in sales.
Some industry experts forecast the sales of commercial vehicles to remain strong due to the Indian government's focus to improve road infrastructure. -
Pre-owned cars
The pre-owned car segment sales turned out to be an outlier. This Navratri, sales declined 30% compared to last year. The slump in sales is an ongoing phenomenon, with car dealers blaming high GST rates. Prior to the indirect tax reform, buyers paid 1% Value Added Tax (VAT), subject to a maximum of rupees 2,000 on pre-owned cars. Now, buyers have to pay 28% GST, plus cess depending on the engine capacity. Thus, the final car price doesn't seem to fit well in the buyer's budget.
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7.1%
Many market participants rely on ‘sensitivity’ analysis. It simply means knowing the impact of growth of a particular sector or a company on the broader sentiment or the market. Indian automotive sector contributes 7.1% to India’s Gross Domestic Product (GDP). It leads the overall contribution of the manufacturing sector of 17% to GDP. The number clearly shows the importance of the growth in this sector and why it is tracked so closely.
