Automobile segment witnesses 13.5% growth in August

Growth in total automobile sales, which include commercial vehicles, passenger vehicles, two and three wheelers, inched 1.5 percentage points from the month of July to 13.5 per cent in August, year-on-year (y-o-y).

Since the beginning of the year, overall automobile sales have witnessed a double-digit growth in the past two months. However, unlike July, the month of August has observed higher sales in all segments, on a y-o-y basis.

According to report by CARE Ratings, "The sales numbers in August 2017 are clearly positive, signalling that the automobile industry is almost out of the difficult times."

Total passenger vehicle sales increased by 5.1 per cent at 3, 51,089 units. Sales of commercial vehicles grew by 14.9 per cent at 72,602 units. "Passenger vehicle sales recorded positive growth, but the growth was restricted due to the uncertainty revolving around the cess rate. For the commercial vehicles segment, infrastructure development and construction activity have fuelled growth during the month," adds the report.

Interest rates have been declining making available easy access to financing. These reasons have spiked the demand in the market.

The three-wheeler sale which has been showcasing a dismal show over the past 17 months has registered a growth of 7.8 per cent in August, on a y-o-y basis. On the other hand, total sales of two wheelers rose by 15.2 per cent at 2,127,567 units.

April-August period has been quite positive for the auto manufacturers. "Players started off with strong sales while the growth was restricted by the GST implementation and ambiguity with the cess rate to be charged to the different categories of passenger vehicles," highlights the report.

The demand for automobiles usually starts picking up in Q2 and gains momentum in Q3 during the festival season. Also, demand remains strong in February and March. In FY18, CARE Ratings expects automobiles to witness pickup in demand post the initial interruptions caused by GST implementation and marginal price adjustments.