Auto sales on track: 3-wheelers buck the trend with 24% growth in FY 19

The three-wheeler segment has reported a robust 24% growth in overall volume (sales) in the financial year 2019, on the back of 49% growth in exports.

Total sales of three-wheelers during FY19 stood at 12.68 lakh units, against 10.22 lakh units in FY18.

While the domestic sales during the fiscal under review saw a 10% growth to 701,011 units as compared to 635,698 units in FY18, exports supported domestic sales heavily with 49% growth to 567,689 units in FY19, against 381,002 in the year-ago period, said a Siam data. This could be possible primarily due to enormous demand for the Indian three-wheelers in Asian and African regions.

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Though this particular segment is expected to continue its last fiscal momentum in FY20, Siam cautiously projected growth of 9% for the three-wheeler industry. Siam’s caution has been due to a possible deficient monsoon as well as political uncertainties and poor consumer sentiments.

Almost all major players, such as Bajaj Auto, TVS Motor, Piaggio, have reported a robust performance in exports due to the surging demand for three-wheelers produced in India in contrast to domestic sales.

While in exports, Bajaj Auto posted a 42% growth to 378,777 units, TVS had 70% growth to 139,710 units, followed by Piaggio with 61% growth to 39,420 units.

On the domestic front, Bajaj sales, during the fiscal under review, grew 8% to 398,826 units and that of TVS Motor domestic sales grew only 1.74% to a meagre 16,715 units.

Piaggio, on the other hand, bettered both the players with 11% growth to 170,000 units, said a Siam data. Other players such as Atul Auto and Mahindra & Mahindra reported a 13% and 21% growth, respectively, to 44,513 and 66,140 units.

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In the fiscal under review, exports of passenger model grew sharply to 561,516 units, against 376,811 units in the previous fiscal, and almost touched that of domestic sales number of 572,392 units (517,423 units).

Market leader Bajaj Auto’s passenger vehicle exports stood higher at 3.77 lakh units, as compared to 3.68 lakh units in domestic sales. Almost all the players have reported a modest growth in the goods segment, with the total industry sales at 1.36 lakh units as compared to 1.23 lakh units in the previous fiscal.

According to CARE Ratings, carmakers are also setting up units for manufacturing electric vehicles and many launches, both in two- and three-wheelers categories, are planned in the coming months during FY20.

Over the past few months with the liquidity crisis in non-banking financial companies and resultant slowdown in credit financing, disbursements for automobile industry is expected to remain slightly under pressure during H1 FY20. However, with the Reserve Bank of India (RBI) bringing down the repo rate to 6% in April 2019, the lower interest cost is expected to provide some stimulus to the auto demand.

Main drivers for the expected growth in the current fiscal include normal monsoon and improved farm activities, lower interest rates and increased infrastructure and industrial activities as well as demand surge from last-mile connectivity for the three-wheelers industry, the rating agency said.