Automobile · India · Industry

It’s a good Diwali for Auto industry in India

After two and a half years , auto industry in India have shown a positive outlook in recent times.The industry has shown a healthy 6.83 % growth with total of 36,415 LCVs sold this October. Medium and heavy commercial vehicles also showed growth with 23.97 % overall growth as compared to the total sales reported last year in this period.

The boost in economy lead by positive outlook from foreign investors , improment in infrastructure and extended replacement buying were said to be the reason for this positive trend.Overall sale of commercial vehicle increased by 12.73% in october while an overall increase of 8.02% was seen in first seven months of the year.

According to Vishnu Mathur , director genral of Society of Indian Automobile Manufacturers (SIAM) “Sales of commercial vehicles are reflecting a revival in the economy. We see demand for the light commercial vehicles coming back. We expect commercial vehicle segment to scale peak level by first half of next year.”

The commercial vehicle has shown a good response to PM Modi’s economic reforms with more than 90000 units sold .Abdul Majeed, partner, PricewaterhouseCoopers, explained, “Heavy and medium commercial vehicles sales are rising due to the replacement demand as well as hope of revival in the overall economy. Even the freight demand is reflecting an upward trend while LCV sales will also gradually pick up in next quarters. There are many favourable indicators to propel growth in the automotive sector such as low interest rates, pent up demand across the segment, low fuel prices etc.”
“An improvement in liquidity in financial market also lead to the growth in the tall ” said Sugato Sen (DDG SIAM).He also added that “Transport companies were burdened by bad debt. Particularly in LCVs, finance was a bottleneck. Now with money coming in, sales are picking up. It has been nearly two years since the LCV segment has shown some growth. Things should improve from here”.

With construction work set to take the full swing in coming months the increase in commercial sale was expected.There will be healthy demand of commercial vehicle in the coming months but the trend would decrease after the festive cycle.

Mr Majeed added ,“After the festive season, the demand might not be sustainable especially due to low off-take in the rural economy as result of drought situation in the major states and also because overall investments cycle has not picked up in the economy to support job creation and growth in the economy. If overdue reforms are accelerated both the Indian economy in general and auto sector in particular will grow significantly,”.

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