PV sales bounce back, notch 14% growth in January 2017

After a couple of months of slow sales for the demonetisation-hit passenger vehicle (PV) segment, January 2017 sales numbers point to a sharp rebound.

With total sales of 265,320 units across the passenger car, utility vehicle and van segments, the PV segment has notched 14.40 percent year-on-year growth, enough to bring a smile and more to PV players. 

The numbers compare very favourably versus December 2016’s de-growth of 1.36 percent and sales of 227,824 with demand for passenger cars down 8.4 percent and for vans by 18.76 percent. UVs, as always, were the buffer with 30 percent growth that month. As against that, January 2017’s numbers are very heartening – demand for cars has risen by 10.83 percent to 186,523 units, UV sales surged by 24.47 percent to 62,264 units and van sales rose 21.65 percent to 16,533 units. Clearly, the buzz is back in the PV industry, thanks to new models courtesy Maruti Suzuki (Ignis) and Tata Motors (Hexa).

The smart uptick in January sales is also due to pent-up demand from December 2016. Usually, the last month of a year sees consumers delaying purchase decisions, preferring to buy a new set of wheels that are registered in the new year, and in turn enabling better resale value down the line.

Maruti Suzuki India led the charge with sales of 133,768 units (+25.74%), while No. 2 player Hyundai Motor India sold 42,017 vehicles (+10.52%). Other notable growth drivers were Tata Motors with 14,721 (13.35%), Toyota Kirloskar Motor with 10,336 units (+21.44%) and Mahindra & Mahindra with 20,096 units (-9.02%).|

DeMo effect still seen on CV & Two-Wheeler segments
While the PV sector has regained sales traction, the demonetisation-caused crash crunch is still weighing heavy on both the commercial vehicle and two-wheeler segments, albeit the rate of decline has slowed down. It may take a couple of months for them to be back in the black.

In the CV sector, M&HCV sales were flat (0.61%) at 28,704 units in January, much better than the 22,788 units sold in December 2016 (-12.41%). The LCV segment saw sales dip 1.86 percent to 32,535 units.

Given that BS IV compliance will be mandatory for all CVs from April 1, 2017, expect a sizeable  amount of pre-buying to happen this month and in March 2017. That in itself should bring cheer to the CV sector which had seen the green shoots of recovery till around October 2016 only to face a speedbreaker in the form of demonetisation.

The two-wheeler segment seems to have borne the brunt of the cash crunch. The once hard-charging scooter market has slowed down. In January 2017, sales were down 14.50 percent to 33,382 units albeit growth has returned to the motorcycle market with numbers reaching 819,386 units (-6.07%) but considerably higher than the 516,690 units (-22.50%) sold in December 2016. Interestingly, demand for mopeds continues to be sustained – DeMo or otherwise. In January, these machines were bought by 69,373 consumers, enough to notch their maker, TVS Motor Co a 28.83 percent growth.

With the Union Budget 2017 behind it, and no nasty surprises for the vehicle buying public, industry should see sales returning at a fairly good clip. With the Budget bounty reserved for rural India, sales from this part of the country will also witness a gradual mark-up. Stay tuned for further updates.