Industry

PVs grew 2.7% in FY19, the slowest in 5 years

With new model launches and aggressive sales promotion by carmakers failing to lift consumer sentiment, the passenger vehicle (PV) segment grew 2.7% in 2018-19, the slowest pace in the last five years, according to Society of Indian Automobile Manufacturers (SIAM).

The current year is also expected to be a challenging one for the industry with the general elections in the first quarter, along with transition to BS VI technology later in the year, prompting the industry body to forecast a modest growth of 3-5% in sales of passenger vehicles for 2019-20.

According to SIAM data, passenger vehicle sales in the last fiscal stood at 33,77,436 units, compared to 32,88,581 units in 2017-18. The 2.7% growth follows the original forecast of 8-10%, which was later revised to 6%. This is the slowest pace of growth for the industry since 2013-14, when sales declined 6.7%.

SIAM president Rajan Wadhera called for a reduction in GST to offset the increase of 10-15% across vehicle categories prices due to BS VI implementation. “It is important to note that we are in election year. Historical data shows that the growth before the elections remains subdued,” he said. Other factors that affected demand included increase in insurance costs, a liquidity crunch and the highest-ever commodity prices that forced carmakers to raise vehicle prices, he added.

“However, if we look at the positive side, we have continued to grow. Also, it is the highest-ever sales and production [achieved] in a financial year,” he added.

Two-wheelers, the data showed, grew 4.85% in FY19, with the industry body forecasting growth of 5-7% for this fiscal. Likewise, commercial vehicles grew 17.55% in 2018-19 and are expected to see lower growth of 10-12% this year.

Seeking lower taxes for the sector, Mr. Wadhera noted that the change in insurance policy has resulted in prices of two-wheelers rising by about 10%. This will go up further with introduction of BS VI. “The [Centre] should look at lowering GST for two-wheelers to 18% from 28%. The impact for cars will be higher with BS VI and other safety norms We need serious consideration from the government,” he said.


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Printable version | Sep 27, 2021 5:57:24 PM | https://www.thehindu.com/business/Industry/pvs-grew-27-in-fy19-the-slowest-in-5-years/article26774018.ece

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