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Business News/ Companies / Car sales rise for 11th month in a row in September
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Car sales rise for 11th month in a row in September

Car makers sold 169,590 units last month, compared with 154,898 in September last year, says Siam

Vehicle sales across categories registered a 0.45% decline to 18.82 million units from 18.90 million units in September 2014, Siam said. Photo: Ramesh Pathania/MintPremium
Vehicle sales across categories registered a 0.45% decline to 18.82 million units from 18.90 million units in September 2014, Siam said. Photo: Ramesh Pathania/Mint

New Delhi: Car sales rose for the 11th straight month in September, indicating strong demand that’s waiting to peak during the festive season starting mid-October.

Car makers sold 169,590 units last month, compared to 154,898 in September last year, lobby group Society of Indian Automobile Manufacturers (Siam) said on Thursday.

The pace of growth too is picking up. In September, passenger car sales grew 9.48%, up from 6% in August.

Sales of all passenger vehicles, including cars, utility vehicles and vans, grew 3.84% to 232,167.

Since the beginning of the 2015-16 fiscal, sales have grown 6.22% to 1.33 million units.

Softening interest rates and comparatively cheaper fuel helped spur the growth in the passenger car segment, Siam said. “Interest rate reduction should come in handy during the festive season," said Sugato Sen, deputy director general, Siam. “Banks need to pass on the benefit to customers."

New model launches too aided sales growth. Auto makers introduced as many as 10 new models and 14 refreshes in the July-September period.

Siam expects the passenger vehicles industry to post a sales growth of 6-8% this year.

India’s gross domestic product (GDP) growth slowed to 7% in the June quarter from 7.5% in the March quarter, reflecting an uneven recovery. Showing signs of continued distress in demand, growth in private final consumption expenditure slowed sequentially to 7.4% in the June quarter from 7.9% in the March quarter.

Siam expects India’s GDP to grow at 7.4% during the year on account of gradual easing of mining bans in some states, improvement in private consumption demand aided by a rise in discretionary spending and faster implementation of projects as the investment climate improves.

In September, sales of commercial vehicles rose 12.07% to 62,845 units. Sales of medium and heavy commercial vehicles (M&HCV), which are a leading indicator of a pick-up in economic activity, rose 63.76% to 31,172 units.

“M&HCV sales are expected to continue to rise on the back of an uptick in infrastructure investment. We, therefore, expect the overall commercial vehicle segment to witness a rise of 7-10% during the fiscal," said Rakesh Batra, partner and national leader, automotive practice at EY India, a consultancy firm.

Sales of light commercial vehicles are likely to see a spurt over the next few months, Batra added.

Truck sales were also driven by replacement demand as transport companies look to upgrade their vehicles before the government rolls out mandatory safety features such as anti-lock braking systems and speed controls. Such features are expected to increase prices by 3-5%.

Sales of two-wheelers, however, declined for the 12th month in a row to 1.53 million, down 1%. Analysts have linked the slide to muted demand in rural markets owing to deficient rainfall for the second consecutive year.

“Motorcycles continue to struggle due to low offtake, especially in the rural market. Scooters are getting more popular with urban customers for personal mobility and this trend will continue, though the growth was moderate in September," said Abdul Majeed, partner and auto practice leader at PricewaterhouseCoopers, another consultancy.

The two-wheeler industry is likely to see a recovery in rural demand during the second half of the year to March next year with the approaching festive season, backed by launches of new models.

The segment is expected to close 2015-16 with a growth of 1-3%, Batra said. “Moving forward, we see auto makers introducing exciting offers and finance schemes (post the interest rate cuts) to attract consumers," he said.

“We expect the market to build some momentum in the second half, leading to a better growth rate in 2016-17."

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Published: 09 Oct 2015, 12:17 PM IST
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