Car sales demand shifts to Compact ones

It was yet again that Indian car sales have seen a downturn. Car sales account for nearly 70 per cent of the total domestic passenger vehicles market viz; cars, vans and utility vehicles. The month of May saw a decline of 0.86 per cent, reporting the fourth decline since January 2016. Car sales stand at 158996 units as against 160371 units during the corresponding month of last year. Sale of vans has seen the biggest drop of 3.44 per cent to 13851 units as against 14344 units in May 2015 (YoY).

Considering other vehicles, Utilities have shown a double digit growth of 35.88 per cent in the wake of new launches specifically the compact ones. Going forward improved macro numbers and monsoon will boost buying.Last year Hyundai's Creta, Maruti Suzuki’s Brezza and M&M’s KUV100 and TUV300 have been newly launched.

The over populated country with narrow roads, demands higher two wheelers every year and as a result two wheelers witnessed an increase of 9.75 per cent from 1380939 units in 2015 to 1515156 units in May 2016. In commercial vehicles segment all the three medium & heavy (M&HCV) and light (LCV) together have contributed to a 16.89 per cent growth YoY from 48841 units to 57089 units in May 2016. M&HCV in isolation has seen a growth of 21 per cent.

Three wheelers segment has grown by 27.34 per cent to 46479 units from 36499 units in May 2015. All in all the automobile sales have grown 9.89 per cent to the total of 1850764 units from 1684263 units in May 2015.

The seasonal impact could be one of the reasons, as automobile sales take a pick-up during Q3 and Q4. The shift to SUVs from passenger cars is not so appealing for auto index as the non-listed auto companies are more into SUV production than the listed ones.