High finance cost dents November passenger vehicle sales

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New Delhi, Dec 11 (IANS) High finance cost dragged the monthly sale of domestic passenger vehicles in the domestic market lower by 3.43 per cent on a year-on-year basis in November to 266,000 units, the Society of Indian Automobile Manufacturers (SIAM) said on on Monday.

According to a data released by SIAM, domestic sales of passenger vehicles in November 2017 stood at 275,440 units.

Among the sub-segments, the sale of passenger cars in the domestic market during the month stood at 179,783 units, 0.91 per cent lower than the 181,435 units sold in the year ago period.

The number of utility vehicles sold in India increased by 10.18 per cent to 69,884 units in November 2018, whereas 16,333 units of vans were sold last month, up from 16,198 units in November 2017.

On the other hand, the commercial vehicle segment’s domestic sales rose 5.71 per cent to 72,812 units last month, the SIAM data showed.

In contrast, the data also pointed out that three-wheelers’ sales decelerated by 11.19 per cent to 53,401 units during the month.

In addition, overall sales of two-wheelers, which include scooters, motorcycles and mopeds, climbed higher by 7.15 per cent to 1,645,791 units.

As per the data, total sales of the Indian automobile sector rose by 5.03 per cent during November 2018 to 2,038,015 units across segments and categories.

However, the overall exports of vehicles across categories was lower by 0.56 per cent to 349,893 units.

According to Sridhar V, Partner, Grant Thornton India: “The sector has shown a growth of 5.1 per cent YoY primarily based on two-wheeler sales followed by ‘CV’ (commercial vehicle) sales and more so the ‘LCVs’, while the ‘PV’ (passenger vehicle) segment has shown a negative growth and festival sales have been a letdown.”

“But the strain is visible caused by multiple factors most important of which is the increase in cost of financing and the availability of finance from NBFC. This is also evidenced by a sequential de-growth, which has been all pervasive including two-wheeler and commercial vehicle segment.”

Commenting on the passenger vehicle sales, Ashish Modani, Assistant Vice President – Corporate Sector ratings, ICRA, said: “Focus on inventory rationalisation by dealerships during festive season has taken toll on wholesale dispatches, which declined by 3.4 per cent during November 2018.”

“The PV sales are likely to remain tepid in the near term, with some improvement expected during ‘Q4 FY2019e’. Unlike CV sector where NBFCs plays a vital role in retail financing, PV retail sales are largely funded by banks and hence liquidity-related pressure shouldn’t have any material impact on PV sector.”



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