Even as domestic car sales seem to be on path of recovery with seventh straight months of growth in May, declining two-wheeler sales due to low rural demand continues to be a cause of concern of the industry.
According to data released by auto industry body SIAM, car sales rose 7.73 per cent during the last month, while two-wheeler sales declined by 1.25 per cent, mainly due to dip in motorcycle sales.
“While recovery in cars sales has begun, the growth is being led by only some companies. Sales for motorcycles and light commercial vehicles have declined, showing that not all is well with the rural economy,” Society of Indian Automobile Manufacturers Director General Vishnu Mathur said.
Domestic passenger car sales in May this year stood at 1.60 lakh units against 1.49 lakh nits in the year-ago month. Total two-wheeler sales during the month declined 1.25 per cent to 13.81 lakh units. While motorcycle sales slid three per cent to 9.53 lakh units, scooter sales saw moderate growth of 2.61 per cent.
“This is the eighth month in a row that motorcycle sales have declined. The main reason is low demand in rural areas as about 50 per cent of motorcycle sales are from there. Even in scooters, we are also witnessing moderation of growth from high double digits to low single digit,” Mr Mathur said.
He explained that while monsoon is one of the reasons for the low demand, the major impact was due to the unseasonal rains this year which damaged the crops.
Sales of LCVs were also down 7.19 per cent at 28,226 units against 30,414 units a year ago.
“For LCVs, barring an increase in September 2014, the segment has been witnessing decline for the past 25 months,” he added.
In May, total vehicle sales across categories registered a decline of 0.58 per cent to 16.84 lakh units, from 16.94 lakh units in May 2014.
Kumar Kandaswami, Senior Director, Deloitte in India, said, “Any rural slowdown will impact some manufacturers more than the others, given the nature of the portfolio and the strength of distribution. Typically, the products that will get impacted are the entry level hatchbacks in passenger cars and SUVs and the economy motorcycles. In the longer term, though, the conditions for greater rural demand may get built on stronger foundations.”
