Demand for passenger and commercial vehicles is likely to stay intact amid some temporary blips during this fiscal, while the two-wheeler industry is expected to grow 8-10 per cent, according to rating agency Icra.
In July, passenger car and utility vehicle sales declined marginally by 0.45 per cent (at 1,91,979 units) and nine per cent (at 79,092 per cent) respectively. Thus, overall PV sales (including vans) dropped by about three per cent at 2,90,960 units.
“Domestic PV volumes declined by 2.7 per cent during July 2018 because of a strike by transporters, which impacted wholesale dispatches from OEMs to dealerships, as well as the high base of July 2017, when dealers restocked inventory following GST implementation; retail PV demand continues to remain healthy,” said Ashish Modani, Assistant Vice-President, Corporate Sector Ratings, ICRA Ltd.
Commercial vehicles
Despite uncertainty arising from the revised axle load norms, the domestic commercial vehicle segment continued to register healthy growth in July. Domestic commercial vehicle sales grew by 29.7 per cent during the month, aided by both LCVs (light commercial vehicles) as well as M&HCVs (medium and heavy commercial vehicles).
“In our view, the impact of new axle load norms will be more visible in the coming months as the production schedule of OEMs would not have been altered in July and, accordingly, wholesale sales,” said Shamsher Dewan, Vice-President & Sector Head - Corporate Ratings, ICRA Ltd.
“While we do expect some disruptions in the near-term, the underlying demand momentum remains favourable as reflected by healthy growth in sales of tippers, aided by the construction and infrastructure segments. The LCV segment (trucks) also continued to see good traction, aided by a favourable financing environment and healthy demand from consumer-oriented sectors, he said.
The rating agency also maintains its outlook for this fiscal and believes the impact of axle load norms will be temporary and would not have a material impact over the medium-term.
Two-wheelers
However, sales of two-wheelers continue to report positive growth. Motorcycle sales grew by about 10 per cent at 1,150,995 units in July this year, while scooter sales increased by five per cent at 5,98,976 units. Mopeds grew by 11 per cent at 67,106 units. Icra maintains its volume growth guidance of 8-10 per cent in the domestic two-wheeler industry in this fiscal.
“Two-wheeler volume growth of 8.2 per cent in July comes on the expanded base of the previous fiscal, when despatches expanded post-GST implementation, and the production disruption for a few days on account of the truckers’ strike. Notwithstanding these minor disruptions, the underlying demand drivers remain strong,” said Anupama Arora, Vice-President & Sector Head, Corporate Sector Ratings, ICRA Ltd.