Car sales drop in May on sluggish demand

The Dollar Business Bureau

After witnessing a strong growth of 11 percent in the month of April, sales in passenger vehicles in May slowed down to 6.26 percent, due to poor performance of the passenger car (cars, vans and utility vehicles) segment.

Monthly sales of cars, which make for around 70 percent of the local passenger vehicle market, dropped 0.9 percent in the month of May.

On the other hand, utility vehicle sub-segment sales witnessed a high double-digit growth. Banking on the new launches and expanding market of compact utility vehicles, the utility vehicle segment increased 36 percent last month.

Out of the five months from January to May, sales in passenger cars have dropped in four, excluding the month of April, in which it grew 1.87 percent.

On yearly basis, car sales dropped to 158,996 units in the month of May. Utility vehicles volumes surged 36 percent to 58,793 units. Sales of vans also declined by 3.4 percent to 13,851 units. Overall, passenger vehicles sales increased to 6.3 percent.

Vishnu Mathur, Director General, Society of Indian Automobile Manufacturers (SIAM) said, “Among the recent launches, most of them have been in the segment of smaller utility vehicles. A consumer is not able to differentiate between a sedan and a small utility vehicle.”

Mathur said that the customers’ demand is shifting from diesel vehicles to petrol and from sedans to utility vehicles. Compared to 34 percent market share of diesel cars in overall sales of passenger car in 2015-16, about 28 percent of customers opted for diesel cars in April.

“The industry is recovering continuously. The industry’s only concern at this point of time is rural demand. According to some major players, the demand from rural areas has slowed down in the month of May, as compared to April,” he said.

Motorcycle sales, one of the indicators of rural demand, witnessed a decline in growth, from 16 percent in April to just above 3 percent in May.

“Motorcycles sales are still to catch up as rural demand has not picked up. With an expected good monsoon this year, the industry would pick up growth after August,” Mathur added.