Passenger vehicle sales grow 115% in March on low base effect, demand surge

Upbeat demand and a low base of same month last year saw the passenger vehicle (PV) market post a growth of 115 percent during March, as per data shared by the Society of Indian Automobile Manufacturers.

March saw 290,939 sales of PV comprising cars, SUVs, and vans, whereas the same month last year witnessed sales of 135,196 sales units. The numbers do not include sales of Tata Motors as the company stopped sharing data with SIAM.

Auto makers had begun to slow down supplies by the middle of March last year and just before the start of the final week of the month lockdown was announced by the government which led to a complete halt in production.

Another reason for the low base of March last year is the switchover to Bharat Stage VI (BS-VI) from BS-IV which forced all companies to pull down stock levels of the outgoing variants leading to lean inventory at company owned stockyards and with dealers.

The two-wheeler segment witnessed an equally robust jump thanks to the same reasons. It saw sales of 1.49 million during March, a growth of 73 percent compared to 866,845 units sold in the same month last year, as per SIAM.

Thanks to the continued robustness in demand the PV makers were able to shrink the gap between FY21 and FY 20 sales despite losing six weeks of sales during April and May due to the lockdown.

The PV segment closed FY21 with sales of 2.71 million units, a drop of 2.2 percent as compared 2.77 million units sold in FY20. The pandemic which sucked out growth pushed the PV industry back to 2015-16 levels.

The two-wheeler segment closed FY21 with sales of 15.11 million units as compared to 17.41 million units sold in FY20. The FY21 two-wheeler sales numbers are below 2014-15, as per SIAM data.

Sales of commercial vehicles closed at 568,559 units, down 21 percent during FY21, compared to 717,593 units sold in FY20. Three-wheelers, which was the worst hit due to the pandemic, closed FY21 down 66 percent at 216,197 units.

Near term outlook

Automakers are upbeat about demand and expect the upward trajectory to continue for next few months. Most carmakers have forecasted a double-digit growth for FY22 given the strong pipeline of new launches and a reviving economy.

Companies like Tata Motors, Hyundai, Kia Motors and Maruti Suzuki are operating their factories at peak production levels while many of their models are carrying a waiting period of 2-4 months.

However, companies have warned about rising costs which is forcing them to carry out price increases more often. In the past six months auto makers have revised prices upwards 2-3 times already and have warned of further hikes if costs continue to inch upwards.