NEW DELHI: Facing the dual impact of a liquidity crunch and lower consumer sentiment, the sale of passenger vehicles (PV) and medium and heavy commercial vehicles (M&HCV) registered a significant decline in November 2018. Domestic PV sales fell 3.4 per cent to 2,66,000 units in November 2018 as against 2,75,440 units sold in the same month last year, while M&HCV sales were down by 11 per cent to 25,363 units last month.
Auto lobbying body Siam said a liquidity crunch in the market, along with rising fuel prices and higher interest rates, had impacted CV sales. Sugato Sen, deputy director general, SIAM, said: “We are looking at what has really impacted the sales of M&HCV. To some extent this could be because of the NBFCs having a problem with liquidity.”When contacted, sources in two NBFCs confirmed they were facing liquidity issues in giving large auto loans. According to them, a very large chunk of auto loans in the CV segment and two-wheeler segment was given by NBFCs.
Sen termed the liquidity crunch a matter of concern and said SIAM will hold a meeting with Finance Industry Development Council (FIDC) and Federation of Automobile Dealers Associations (FADA) on December 14 to find a possible solution. On the declining PV sales, Siam said factors such as higher interest rate, increase in upfront insurance and rising fuel prices had lowered consumer sentiment during the festive season.
It is also expected that PV sales in December will remain in negative territory as most of the OEMs are going for inventory correction and have reduced production because of a dull festive season. For fiscal year 2019, the PV industry is likely to clock annual growth of 6 per cent as against the earlier projection of 8-10 per cent. In the April-November 2018 period, PV sales grew by 4.9 per cent over last year’s sales.
Vehicle sales across categories registered a rise of 5.03 per cent to 20,38,015 units, from 19,40,462 units in November 2017.The growth in the auto industry mainly came on the back of good motorcycle sales, which increased 9.36 per cent last month to 10,49,659 units, compared to 9,59,860 units in November 2017.