Domestic passenger vehicle sales cross 3 million units in FY2017

Headwinds such as demonetisation and Supreme Court ruling on BS III vehicles notwithstanding, automobile sales in India rose to record levels for the financial year 2016-17. Passenger vehicle sales crossed the 3-million mark to end at 30,46,727 (3.04 million) units, up 9.2 percent from 27,89,208 units sold in the preceding fiscal, according to a PTI report.

Two-wheeler sales, hit the most by Prime Minister Narendra Modi's decision to ban Rs 500 and Rs 1,000 currency notes, remained flat at 14,71,576 units in comparison to 14,67,710 vehicles in 2015-16, the news agency said, citing data released by industry body Siam.

In March 2017, companies were on an overdrive to dispose off their BS III vehicles, resulting in car sales rising 8.17 percent to 190,065 units as against 175,709 cars sold in March 2016. 

For the full year 2016-17, domestic car sales stood at 21,02,996 units, up 3.85 percent from 20,25,097 units in 2015-16.

Jaguar Land Rover (JLR), the luxury vehicle arm of Tata Motors, sold 604,009 cars, 15.80 percent more than 521,571 units sold in the preceding fiscal.

Sale of commercial vehicles, a segment dominated by Tata Motors, Volvo Eicher Motor Vehicles and Ashok Leyland, rose 9.2 percent to 87,257 units in March 2017.

Meanwhile, in a conference call with analysts, Ashok Leyland said that the impact of the Supreme Court ruling banning sale of BS III vehicles from April 1 won't have a significant financial impact.

"Of the ~10.7k MHCV BS-3 inventory remaining by March-end, Ashok Leyland plans to export ~2k units and replace the remaining with BS-4 engines. This will be done on the same engine platform as BS-3 and would incur only limited cost. The existing BS-3 engines would be sold in the aftermarket segment," brokerage Nomura said on Tuesday in a note, after attending the conference call on Monday.

The company sold 18,682 units last month, up 12 percent from 16,702 units in March 2017 while the cumulative sales for 2016-17 increased 3 percent to 145,066 units.

Ashok Leyland raised prices by about 10 percent for its BS-IV vehicles effective from the current month and this could pose a risk to it in a competitive environment. "We maintain our negative view on the MHCV segment and expect a 5% decline in FY18F led by sharp price hikes, demand uncertainty post GST implementation in July 2017, rising competition from railways and a weak fleet operator profitability index," Nomura analysts said.