India auto sales touch new high in CY2017; SIAM revises growth outlook for FY2018

For the first time in a calendar, the industry sold over 3.2 million PVs in CY2017 growing 8 percent, when it had just missed the 3 million mark by a whisker in CY2016 with sales of 2.97 million units.

Within passenger vehicles, passenger cars sold a record 2,168,000 units (+5%) in CY2017 and UVs witnessed a surge of 20 percent, selling 870,000 units. Even though the numbers look puffed, PV segment has performed better, growing 9.77 percent in CY2012, 30.85 percent in CY2010,  17.97 percent in CY2009, 15.28 percent in CY2007, 2006 18.48 percent in CY2006, and 23.88 percent in CY2004.

The two-wheeler segment also grew substantially, selling more than 19 million units in the entire year, with scooters growing 14 percent with 6,400,000 units and motorcycles registering a 6 percent growth with 11,928,000 units. However, Mopeds declined by 2 percent at 849,000 units.

M&HCVs grew 8 percent with sales of 321,000 units and LCVs zoomed ahead with a 16 percent growth, selling 468,000 units in CY2017.

December 2017 sales

In the month of December, the industry registered cumulative sales of 1,666,646 units (+36.39%), with passenger vehicles (239,712/+5.22%), commercial vehicles (82,362/+52.62%), three-wheelers (56,980/+90.54%) and two-wheelers (1,287,592/+41.45%), all posting substantial growth.

The notable surge has rather kept the industry foot tapping almost the whole of Q3, with the amplification primarily coming across over a low year-ago base created by the prolonged effect of the government’s demonetisation drive, implemented in November 2017.

Total sales between October-December stood at 5,768,680 units with passenger cars (795,000/+6%), CVs (221,001/+34%), three wheelers (178,679/+51%) and two-wheelers (4,574,000/16%), showcasing strong resurgence against a dramatically slower Q3 of FY2017.

Along the first three quarters between April-December 2017, the industry scored cumulative sales of 18,519,618 units, registering an overall growth of 11.28 percent, with PVs selling 2,425,911 units (+8.13%), CVs seeing sales of 574,337 units (+15.19%), three-wheelers garnering sales of 438,227 units (+7.89%) and two-wheelers clocking sales of 15,081,143 units (+11.76%). With considerable growth across all key vehicle categories, FY2018 looks poised to put the Indian automotive sector in an upbeat mood by the end of this fiscal.

Main vehicle segments remained on a positive trajectory during this nine-month period, with passenger cars clocking 1,618,940 units (+4.19%), UVs selling 664,230 units (+19.43%), LCV goods carriers selling 319,297 units (+23.48%), scooters going home to 5,087,548 buyers (+18.52%) and motorcycles selling 9,360,728 units (+9.77%).

M&HCV and LCV passenger carriers, however, are on a negative trend with sales of 24,452 units (-27.08%) and 32,209 units (-10.71%) respectively between April-December 2017, and directing towards government’s little attention in enhancing road public transport

Quarter Report: Export situation in Q3 FY2018

Passenger vehicle exports, which comprised 20 percent of the overall produce in Q3, witnessed a de-growth of 7 percent. According to Sugato Sen, deputy director general, SIAM, “Even though there were slight troubles in some of the foreign markets, it has been more of a choice taken by key OEs to concentrate on sales in the domestic market rather than exports.” Total PVs exported during the three-month period stood at 194,000 units (Q3 FY2017: 209,000).

CV exports were comparatively better than PVs and registered a 3 percent growth with 28,000 units being shipped (Q3 FY2017: 27,000). Exports accounted for 12 percent of the total CVs manufactured in Q3.

Three-wheeler segment shone at the top and lead the tally, exporting 104,000 units (Q3 FY2017: 67,000) and recording a substantial 54 percent growth, exporting 37 percent of the total produce.

Two-wheeler exports registered shipments of 705,000 units (Q3 FY2017: 573,000), growing 23 percent and seeing 13 percent of the production being shipped to foreign markets. In a larger picture, almost 2.5mn two-wheelers have been exported from India in CY2017.

Business environment

The financial parameters including the interest rates on PVs and CVs have continued to remain the same in Q3 of FY2018, with nationalised banks offering car loans at 9.5 percent and NBFCs offering loan for commercial trucks at 15.50 percent.

Commodity prices have also trended in favour of the automotive sector with key commodities including pig iron and virgin aluminium showing a marginal decrease of 0.32 and 0.41 percent between September-November 2017. While copper (+3.55%) and lead (3.29%) have escalated during the same period, natural rubber declined by a considerable 6.18 percent.

On the global dias, growth in domestic PV sales in India between January-November 2017 at 9.15 percent with sales of 2,989,397 units (January-November 2016: 2,738,780) stood only second to Brazil, which registered a tremendous 55.18 percent growth, clocking 666,416 units in the same period(January-November 2016: 429,445). CV sales in India, which registered 707,476 ( January-November 2016: 648,525 +9.09%) also followed Brazil in terms of growth, which sold 34,477 CVs (January-November 2016: 27,900).

While China led in terms of the sheer size of the market, selling 22,091,500 (+1.94%) PVs, UK (2,388,144 / -5.04%) and the US 5,584,907 / -10.96%) faced a sales slump during the first eleven months of the calendar. South Korea with 3,410,973 units (+0.45%) and Japan with 3,413,573 units (+8.09%) complete the overall global PV sales scenario during January-November 2017.

Revised industry growth outlook for FY2018

While the overall manufacturing capacity utilisation across the industry is less than optimal at around 75 percent until June 2017, a growing GDP of 7.6 percent augurs well for the sector. Supporting factors like low inflation at 4 percent in FY2018 (which once soared to even 12.4 percent in FY2010), fading of the demonetisation effect, improving investment outlook in the coming future, along with the positive impact of GST implementation, have together made the apex body take note and gauge an accelerated performance. Revealing the Q3 results, SIAM has also revised the growth outlook for the industry for FY2018.

While PVs, which were earlier slated to grow between 7-9 percent will now march ahead with a realistic 9 percent growth rate; CVs, rather than growing at a measly 4-6 percent rate projected earlier have seen a substantial jump to close the fiscal at 13 percent and the two-wheeler segment has also been revised to grow at 12 percent by end of March 2018, opposed to the earlier 9-11 percent projected growth rate. Three-wheelers are set to grow by 7 percent.

Within PVs, passenger cars are expected to grow by 7 percent, UVs by 20 percent and vans by 6 percent. Two-wheeler segment will see scooters leading the front with 20 percent growth and motorcycles by 11 percent. Due to a decline in orders from STUs in the public transport space, growth for the bus segment is forecasted to degrow by 13 percent, while the remaining CV segment is expected to boast a 16 percent growth rate by end FY2018.