India’s vehicle sales maintained their upward momentum in February, backing up the revival story in the world’s fastest-growing economy. Auto makers reported steady growth with new models such as the Maruti Suzuki Swift, Hyundai Verna and Tata Nexon pushing up sales numbers.

Experts said the trajectory is likely to stay positive through to the end of 2018 with the effects of demonetisation and GST implementation having worn off. Commercial vehicles and tractors also made a strong showing, with the Budget having pledged greater support for farmers.

The country’s biggest carmaker Maruti Suzuki India (MSIL) reported a growth of 13.3% to 136,648 units from the year earlier. While sales of mini cars (Alto, WagonR) rose 2.1% to 33,789 units, those of compacts (Swift, Baleno, Ignis, Celerio, DZire, Tour S) surged 38.7% to 65,213 units. Demand for midsize sedan Ciaz continued to slide and dropped by 16.8% to 4,897 units. However, utility vehicles (Ertiga, S-Cross, Vitara Brezza) sustained their growth momentum — sales rose 13.8% to 20,324 units. Maruti Suzuki’s market share stood at 50.1% at the end of January 2018.

India’s GDP grew 7.2% in the third quarter, surpassing expectations and regaining its status of fastest-growing economy from China on the back of a rebound in industrial activity, an expansion in agriculture and a rise in investment, according to data released on Wednesday. The FY18 growth projection was revised marginally upward to 6.6% from 6.5% estimated earlier.

The theme was also reflected in sales of commercial vehicles and tractors in February. Mahindra & Mahindra Farm Equipment Sector’s domestic sales stood at 19,280 units, up 39%. Escorts Agri Machinery sold 6,462 tractors, up 52.2%.







“We have sold 19,280 tractors during February 2018 with a growth of 39% over last year,” said Rajesh Jejurikar, president, farm equipment sector, Mahindra & Mahindra (M&M). “With the announcement of record horticulture production and increased Union Budget allocations to rural and agriculture sector, we expect the growth momentum to continue in the coming months.”

Hyundai Motor India Ltd (HMIL) posted growth of 5.1% to 44,505 units on the back of demand for the newly launched premium hatchback Hyundai Elite i20 and midsize sedan Hyundai Verna. The company registered a strong performance across the premium hatch, midsize sedan and sports utility vehicle segments “in a growing market on the strength of stable interest rates and fuel prices”, said Rakesh Srivastava, director, sales and marketing.

Mahindra & Mahindra passenger vehicle sales rose 8% to 22,389 units, while Tata Motors continued with its domestic revival, posting a 45% increase to 17,771 units, largely thanks to a 165% rise in utility vehicles while passenger cars rose 17%. Tata Motors has been able to get its domestic passenger vehicle operations back on track with several new models including the Tata Nexon mini SUV.

As the country’s largest commercial vehicle manufacturer, Tata Motors recorded 36% growth in domestic sales at 41,222 units in February. Sales of Ashok Leyland’s commercial vehicles rose 29% to 18,181 units. Mahindra & Mahindra saw CV sales rise 28% to 20,946 units.

“The increased imposition of restrictions on overloading, continued momentum in the infrastructure and construction segments and fresh tenders in the car carrier, coal movement and the petroleum sectors has boosted demand in the M&HCV segment resulting in a robust growth of 25%,” said Girish Wagh, president, commercial vehicles business unit, Tata Motors. “The ILCV segment performed strongly, witnessing a 54% growth driven by rising demand from ecommerce and logistics sectors.”

Other factors he cited include supplies to government and municipal corporations besides an increase in demand for school buses.

Toyota Kirloskar Motor (TKM) sold 11,864 units last month, up 2.8%.

M&M’s performance in passenger vehicles has been driven by sustained momentum in the market, which “we believe will also continue in the month of March”, said Rajan Wadhera, president, automotive sector.

Anurag Mehrotra, president and managing director, Ford India, was more cautious, citing headwinds in the form of interest rates, crude prices and inflation. “We also believe the increase in customs duty and the cess on exports will drive up prices, with a potential of impacting demand,” he said. The company recorded a growth of 8.4% to 9,041 units. Ford India also said it’s raising the prices of all its vehicles by up to 4% from March 1, 2018, after the government’s decision to increase import duty on auto components.

“There is momentum in the market, as was reflected in the third quarter GDP numbers,” said Sridhar V, partner at Grant Thornton LLP. “We have to wait and see if there are any inflationary trends going ahead. That aside, there are a lot of positive indicators — the proposed spend on infrastructure development, the favourable monsoons have increased marketability of products in rural markets. A number of vehicles showcased at the Auto Expo will be launched commercially over the next few months — this would further excite the market.”

TWO-WHEELER DEMAND IMPROVES

Demand in the two-wheeler segment, which had taken a hit due to the twin impact of demonetisation and transition to BS IV emission standards from BS III early last year, also seems to have bounced back. Market leader Hero MotoCorp reported a growth of 20% to 629,597 units (domestic and exports). Honda Motorcyle and Scooter India’s sales rose 32% to 519,735 units. Bajaj Auto sales rose 21% to 297,514 units. Royal Enfield was up 25% to 73,077 units and Suzuki Motorcycle grew 37.2% to 52,083 units. The Society of Indian Automobile Manufacturers (SIAM) expects two-wheeler sales to grow 12% for the entire fiscal year, up from initial estimates of 9-11%.

Passenger vehicle sales rose 9% to 255,359 units in February 2017. After reporting upbeat January data, SIAM had raised its final sales estimates for the current fiscal year through March. It expects passenger vehicle sales to now grow at the upper end of its previous estimate of 7-9% with good consumer sentiments across rural and urban centres buoying markets.