Passenger vehicle sales not yet impacted by rising oil prices: SIAM
NEW DELHI: The recent surge in prices of petrol and diesel is yet to impact sales of passenger vehicles (PV) in the country, as the current fuel prices are yet to cross the “tipping point” that creates a negative sentiment in the market and impact sales, said Sugato Sen, Deputy Director General, Society of Indian Automobile Manufacturers (SIAM), on Tuesday.
“In the past, we did a cross elasticity study between oil prices and vehicle sales. We found that the relation between the two is not very strong. However, if the oil price crosses a tipping point, say `100, it will create a problem for the industry,” Sen said.
Petrol prices have gone up by around 5 per cent since August 1, while diesel prices are up by 7 per cent during the period. The spike in fuel prices, coupled with falling rupee value, has forced many automakers including the country’s largest PV maker Maruti Suzuki to increase the prices of their vehicles by 2-3 per cent.
According to Sen, there is possibility of a mild shift from diesel cars to smaller fuel-efficient cars because of higher fuel prices, but the shift is not very significant now. The share of diesel cars has already come down to 23 per cent from over 40 per cent in the last five years, but they have their own reason, he said.
SIAM maintains that the PV sales will register strong growth from October, when the festive season starts. However, September sales are expected to remain negative like in July and August or see low growth.
PV sales declined for the second straight month in August, falling 2.46 per cent to 287,186 units, while two-wheeler sales saw a marginal 2.91 per cent growth. Sen said that two-wheeler sales growth has declined due to West Bengal’s restriction that vehicles should be sold only to driving license holders.
But while monthly sales were down, the overall sales in the five months of this fiscal (ended August 2018) remains strong. PV sales in the five-month period are up by 9.81 per cent and SIAM expects it to be to the tune of 8-12 per cent for the whole fiscal.