Automobile Sales in India - FY 2019

Automobile Industry in FY 2019

Indian manufacturing sector  continue to report a slow growth in the Fiscal but Automobile industry in Fiscal FY 19 reported a growth of 6.3% in manufacturing of vehicles. For the first time more than 3 crore vehicles were manufactured in India and the production in FY 19 was at 3.09 crore vehicles. 

The performance of the Industry is based on overall Economic Growth , Industry growth, Infrastructure growth and availability of finance . Monsoons also a play a role in influencing the demand of the industry.  The new concept of sharing economy and ride hailing services created a demand for  vehicles. The fast growth of E commerce is also creating lot of opportunities in the Logistics sector and the Ecommerce Retailing companies are planning to place large orders for vehicles going forward.

The Indian auto industry reported a 6.5%  increase in overall vehicle sales in 2018-19, witnessing lower sales growth compared to a growth of  14.5% in FY18. The sales growth in the last few months was affected by the unexpected crisis in the NBFC sector,  liquidity crunch, uneven monsoon, increase insurance cost over the previous year , higher fuel cost and the move towards shared mobility in Cities and towns of India.

Indian has emerged as a hub for manufacturing of exports of vehicles. Exports constituted 15% of sale of vehicles in FY 19. More than 46.29 Lakh vehicles were exported in the year FY 2019 and the growth in exports over the previous year was at healthy 14.5%. The passenger vehicles witnessed a decline of 9.6% in exports but India has become the preferred destination for small car manufacturing in the world. More than 6.76 Lakh cars were exported from India last year. The export of commercial vehicles were closer to 1 lakh and the growth was at 3%. The one segment , which grew very fast in exports was three wheelers. It grew by more than 49% and more than 5.6 Lakh three wheelers were exported. India exported 32.8 Lakh two wheelers in FY 19 and the growth in exports of this segment was at 16.5%.

Domestic sales of vehicles rose by 5.15% YoY to 2.62 croroe units .

Segment	2017-18	2018-19	%change	%of Total
Passenger Vehicles	40,36,947	40,53,629	0.41	13.12
Medium and Heavy commercial Vehicles	3,84,874	4,39,414	14.17	1.42
Light Commercial Vehicles	5,68,907	6,67,836	17.39	2.16
Total  Commercial Vehicles	9,53,781	11,07,250	16.09	3.58
Total Three Wheelers	10,16,700	12,68,700	24.79	4.11
Total Two wheelers	2,30,15,120	2,44,62,231	6.29	79.17
Quadricycle	1,605	5,027	213.21	0.02
Total	2,90,24,153	3,08,96,837	6.45	100.00

Passenger Vehicles. Total production  in FY19 was won by 1.33%  and it was at  40.26  Lakh units. The domestic sale had a slow growth and it was 33.77 Lakh units in FY19 ,grew by 2.7%. within Passenger vehicles exports were not affected much like in the case of Passenger cars. The decline in export of Utility vehicle was only 4.8% compared to the decline in export of Passenger cars by 11.42%

Commercial Vehicles. Total production  in FY19 was up by 24.20%  and it was at  11.1 Lakh units. The domestic sale of CVs was up by 17.55% YoY to 10Lakh units in FY19. In Medium and Heavy Commercial Vehicle Category, Sales in FY 19  grew by 14.66% YoY to 3.9 Lakh units. Domestic sales of LCV segment rose by 19.46% YOY to 6.16 Lakh units .

Three Wheelers. Sales of three wheelers witnessed a healthy growth of  24.79% YoY to 12.68 Lakh units in FY19. Total production  in FY19 matched up with the sales requirements. The domestic sale had a high growth of 24% and and it was 12.68 Lakh units in FY19 . Exports were very healthy and India as a country has become very competitive for three wheelers in the world today. More countries were added to the export destinations in the year FY 19.

Two wheelers sales grew by 6.29 % YoY in FY19 to 2.45 crore vehicles. An average of more than 20 Lakh vehicles per month. But by the end of the year, the growth rate was less.  Total production  in FY19 was increased by 5.82%  and it was at  2.45 crore units marginally higher than the overall sales.   The domestic sale had a low growth of 4.86%  and it was at 2.11 crore units. The exports grew at a healthy growth rate.

Industry outlook for  FY 20. From FY 21 , BS – VI will be implemented. This will increase the cost of the vehicles. To avoid paying a higher price, customers will buy for the requirements in FY 21 in the year FY 20 only. Even after factoring this , according to SIAM , the leading Industry body for Automobiles in India,  passenger vehicle sales is projected to grow between 3 to 5 per cent and commercial vehicle will grow between 10 to 12 per cent. The two-wheeler segment is expected to grow between 5 to 7 percent and three wheeler segment is will grow between 7-9 percent. On large volumes, still the Sales increase will be significant and Automobile Industry will continue to contribute to manufacturing growth in a big way.