May shows signs of weakness in car sales even as SUVs sizzle

Ban on registration on diesel car and weak rural markets, kept car sales on a clip in May, though customers lapped every opportunity to buy sports utility vehicles or SUV on a bullish urban demand.

Car sales that form the biggest chunk of the passenger vehicles market declined 0.86 per cent to 1.58 lakh units as only seven of the 16 automakers remained positive last month. Cars have decline in four of the first five months this year.

The entire growth in passenger vehicle industry is being driven by high double digit increase in SUV sales. Riding on new launches and the expanding segment of compact utility vehicles, the segment grew 36 per cent in May and lifted the overall sales of passenger vehicle to 6.25 per cent in May 2016 over the same period last year.

Higher demand and dispatches of SUV's models like Hyundai Creta and Maruti Vitara Brezza and the M&M's KUV100 and TUV300 models all launched in the last one year helped the industry to put up a decent show.

As per the data compiled by the Society of Indian Automobile Manufacturers' or SIAM, showed that there is a growing customer's tendency to buy cars without any segment differentiation.

"We have noticed that the much visible segments and categories are diminishing and hatchbacks or SUV are getting crystallized in broader category of cars for a common customer. This could be because of many India specific compact SUV models like the Maruti Vitara Brezza of the Renault Kwid which generally appeal to younger customers are being visualized as new means of mobility," SIAM director general Vishnu Mathur told Business Today.

Other noticeable segment of growth was scooters tat maintained their winning streak with the May too and grew 25 per cent to 4.54 lakh units sold in May this year, taking the cumulative two wheelers segment to 9.75 per cent growth over the earlier year. Bikes that form 40 per cent of the sales grew 3.34 per cent last month.

The overall commercial vehicles segment registered a growth of 16.89 per cent in May 2016 as compared to the same period last year with the critical medium and heavy segment registered a growth at 21 per cent over the same period last year.

"The automotive industry outlook for this fiscal year is much better. Passenger cars, Utility vehicles, heavy and medium commercial vehicles, light commercial vehicles and motorcycle as well as scooters segment volume should grow this year. To support the growth there are multiple positive factors such as positive customer sentiments, development in the overall economic activities, increase in freight demands, favourable interest rates, better monsoon and manageable inflation," said Abdul Majeed, partner at Price Waterhouse.

The three wheelers sales grew by 27 per cent in May 2016 over the same month last year largely helped by passenger and goods carrier that grew 30 per cent.
 
In May 2016, overall automobile exports declined -3.82 per cent. While passenger and commercial vehicles registered a growth of 0.48 per cent and 5.14 per cent, three two wheelers declined 45 per cent and two wheelers posted a 2.03 per cent growth over last year.