Indian Automobile sales grew in May 2017
By Georgi Ninov - Research Analyst
Indian Automobile sales grew with 9.6% in May 2017 which marked the fourth consecutive month of positive growth. The booming sector was affected by the demonetization of November 2016 and experienced an annual decrease for the period November 2016 – January 2017 (being hit particularly hard in December - -16%).
The growth in May was spurred by the two sales among the two largest groups of vehicles – two-wheelers and passenger vehicles, which increased by 11% and 9.3% respectively. Overall, two-wheeler sales were almost identical to April (1.92mn units versus 1.91mn) with motorcycle sales comprising around 2/3 of the total, followed by scooters (583th units). 309th passenger vehicles were sold in May, out of which the passenger cars clearly dominated (212th units) followed by utility vehicles (82th) and vans (15th).
On the other hand, commercial vehicles were underperforming for a second month in a row, decreasing annually by 9.3% in May. This was driven by the sharp decline in medium and heavy commercial vehicles (-28%), despite the fact that they account only for 1/3 of the total sales. A 5.4% increase in the sales of light commercial vehicles could not offset this effect.
According to the statistic, around 86% of overall automobile sales were on the domestic market in May. Two-wheelers have a larger overall share, with 88% versus 82% for passenger vehicles. The domestic market for scooters was booming in May as scooters sales increased by 24% annually, while motorcycles grew at 7.7%. Similarly, among the passenger vehicles, utility vehicles experienced a huge boost, growing at 18.8%. Commercial vehicles sales were again split, and while the light vehicles sold well (14.3% increase) the medium and heavy vehicles sales declined by 33%.
Indian automotive industry is one of the biggest in the world, being the leader in the production and sales of two-wheelers and among the top 5 producers of passenger vehicles. For the fiscal year 2016-17 a record amount of 19.9mn two-wheelers and 3.8mn passenger vehicles were sold. The local market leader among the two-wheelers, Hero Motocorp Ltd, managed to increase its annual net sales by 7.9% thus reaching a historical high of 308.5bn INR. Automobile sales are expected to grow at around 8-10% for FY 2017-18.