India Ratings and Research (Ind-Ra) has published the March edition of its credit news digest on India’s Auto sector. The report highlights the trends in the sub-segments of auto sector, including passenger vehicles (PV), commercial vehicles (CV) and two-wheelers (2W), with a focus on sales volumes growth, market share movement, change in commodity prices and the recent rating actions.
In FY18, India’s automobile sales volume increased by a record 14 per cent year on year (YoY), the highest growth rate achieved since FY11, according to a India Ratings and Research (Ind-Ra) report. The growth was backed by a strong demand in the commercial vehicles (CV) and two-wheelers (2W) segments.
During March 2018, domestic industry volumes increased 18.2 per cent YoY and 5 per cent month on month (MoM).
Medium and heavy commercial vehicles’ (MHCV) sales grew 12 per cent YoY in FY18, after reporting significantly weak sales in 1QFY18. The blip in 1QFY18 was mainly due to pre-buying witnessed in the previous quarter on account of transition from Bharat Stage (BS)-III to BS-IV, added Ind-Ra report. From 2QFY18 onwards, sales rebounded in the MHCV segment, benefiting from road and infrastructure development in the country, streamlining of the logistics post Goods and Services Tax (GST) implementation and implementation of overloading bans in the country’s larger states such as Uttar Pradesh, Rajasthan and Madhya Pradesh.
Light commercial vehicles’ (LCV) sales also spurred by 25 per cent YoY in FY18. Demand in the LCV segment came from the consumer driven sectors, transportation of agricultural produce which benefitted from favourable monsoons, and growth in online retail.
In March 2018, sales volume of MHCV and LCV increased by 16 per cent YoY and 31 per cent YoY, respectively.
The two-wheeler sales spiked by 15 per cent YoY, with positive contributions from scooters and motorcycles segments. The motorcycle segment which had been facing a slowdown since FY13 witnessed a strong growth of 14 per cent YoY in FY18. A pent up demand in the motorcycles segment, supported by favourable monsoons for last two years and new product launches in the segment were the key drivers for the improvement in sales. Scooters segment continued to record robust sales growth of 20 per cent YoY. In March 2018, 2W sales were up by 18 per cent YoY.
According to Ind-Ra report, the PV segment recorded a steady growth over FY15-FY18. In FY18, domestic sales volume increased by 8 per cent YoY, backed by strong sales of compact utility vehicles, which continued to grow at more than 20 per cent for the second consecutive year. In March 2018, PV sales were up by 6 per cent YoY.
Automobile exports from India revived in FY18, with a 16 per cent YoY growth, driven by robust growth under motorcycles and three-wheeler segments, partially offset by weaker sales in PV and CV segments, added the report.
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