Rating agency Research Wednesday revised the passengers' vehicles (PV) volume growth forecast downward to 7-9 per cent, from its earlier estimate of 9-11 per cent for the financial year, owing to sluggish demand and higher inventory even during the festive season.

Domestic passenger vehicle sales grew 1.55 per cent to 284,224 units in October, against 279,877 units in the year-ago month, snapping three months of consecutive decline, although low market sentiments affected festive season demand.

Of this, the car sales volume saw a flat growth, while the utility vehicles segment registered a 4 per cent growth.

"Dusshera and Diwali period (September and October/November), which typically contributes a fifth of annual sales, haven't exactly sparkled for automobile makers or original equipment manufacturers (OEMs)," said in a note.

Also, over the first 10 days of October, sales were affected due to shraadh (traditionally considered an unauspicious period), during which people in north India don't buy new cars, it added.

According to data by the Society for Automobile Manufacturing (SIAM), the in July, August and September declined by 2.71 per cent, 2.46 per cent and 5.61 per cent, respectively.

While sales increased by only 1.6 per cent in October, for September and October combined, they de-grew by around 2 per cent, said, adding, "Consequently, fiscal-to-date (April-October) growth is just 6 per cent, which is a major worry for OEMs."



The rating agency in its note also observed that the waiting time for popular models has come down to just a couple of weeks, while face-lifts are outnumbering new launches.

Dealer inventory post-Diwali stands at around 40 days unlike around 30-35 days in the festival seasons of the past couple of years, it said.

"Consequently, we are trimming 200 basis points from our earlier growth forecast of 9-11 per cent for the passenger vehicles industry to 7-9 per cent," it said.

However, the commercial vehicle segment continued to grow at a double-digit rate for the 12th straight month in the previous month, rising 25 per cent year-on-year, Crisil said.

This growth was led by an 18 per cent rise in the sales volume of medium and heavy commercial vehicles (MHCV) and a 29 per cent rise in the sales volume of light commercial vehicles (LCV), as per the note.

The strong growth momentum in MHCV sales volume was driven by higher growth in the tipper segment, backed by a rise in construction spending and an uptick in industrial activity.

The LCVs continued to benefit from steady demand from the rural economy and the consumption-driven and e-commerce sectors, Crisil said.

According to it, the two-wheeler sales volume rose at a robust 17 per cent rate, supported by buoyant demand during the festive season, but was partially constrained by higher insurance premiums and the restriction in West Bengal (a significant market for two-wheelers) that allows the sale of two-wheelers to only driving licence holders.

During the month, motorcycle sales registered higher double-digit growth on a year-on-year basis, supported by steady rural demand. Scooter sales volume grew at a modest rate of 13 per cent in October, the note said.