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Growth Of The Indian Automobile Industry In FY 2018

India is currently one of the largest markets in the world as far as automobile sales are concerned. Car manufacturers raised a toast for the financial year 2017-18 as it turned out to be one of their best in terms of sales. The industry registered double-digit growth between 1st April 2017 and 31st March 2018. The year also marked India surpassing Germany as the fourth largest automobile market on a global scale to stand right behind China, the US, and Japan.

The automobile industry in India observed a sales growth of 9.2% during the last financial year, as total sales hit 4.02 million units. In comparison, Germany saw a sales growth of 2.19%, selling 3.81 million units. These statistics are inclusive of commercial and passenger vehicles that were sold between April 2017 and March 2018.

Indian Automobile Industry

Expert Opinion:

Industry experts are of the opinion that FY18 was a landmark in the history of automobile sales in India. The volume of sales grew on the back of the momentum of the previous year to reach double-digit figures. This has happened for the first time since the financial year 2012. The growth can be largely attributed to the improvement in the rural economy and the after-effects of demonetisation.

The Society of Indian Automotive Manufacturers (SIAM) shared a report recently, showing domestic sales and exports across all segments in the market recording a surge.

  • The passenger vehicle market observed growth of 7.89%, selling 3.28 million units during FY 2018. The majority of the units sold were utility vehicles, the sales of which independently surged by 20.97%. The sale of passenger cars and vans also recorded a growth of 3.33% and 5.78% respectively during the same timeframe.
  • As far as commercial vehicles are concerned, the total sales saw a growth of 19.94% during the last financial year. The segment of Medium & Heavy Commercial Vehicles (M&HCVs) grew by 12.48% while the Light Commercial Vehicles (LCV) segment observed growth of 25.42%. The sale of three-wheelers also grew by 24.19% between April 2017 and March 2018.

Industry analysts are expecting to see the momentum of growth carry forward to the financial year 2018-19, across most of the segments. There may be moderation in growth of commercial vehicles (CVs) sales though.

The industry is currently subjected to a series of investments in research and product development so that regulatory changes such as BS VI emission norms are implemented. Investments are also being made for the implementation of the government’s vision of an all- electric fleet by the year 2030. There are also reforms likely to come up in the safety standards of four-wheelers in the country.

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Production Statistics:

When the statistics of vehicle production is taken into consideration, a total of more than 29 million units were produced between April 2017 and March 2018. This includes commercial vehicles, passenger cars, two-wheelers, three-wheelers, and quadricycles. The growth in production in the industry was 14.78% when compared to the same period the previous year.

Market Share Of Auto Manufacturers:

According to SIAM data, car makers’ market share in the year 2017 in India is as follows:

Auto manufacturer Percentage of sales
Maruti Suzuki 49.6%
Hyundai Motor India 12.33%
Mahindra & Mahindra 7.5%
Tata Motors 5.91%
Honda Cars 5.53%
Toyota Kirloskar 4.32%
Renault India 3.48%
Others - including Skoda, GM India, FCA, Force Motors, Isuzu 5.49%

The above data is based on the total sales for the calendar year 2017

SIAM has confirmed that Indian automakers are producing vehicles at 60-65% of their production capacity on an average. Although the implementation of the GST regime has had a negative impact on car exports, tax refunds worth Rs.2,000 crore will be provided by the government to the companies in the near future.

  • The largest auto manufacturer in India, Maruti Suzuki, dominated the car sales in the country in the calendar year 2017 with a 49.6% market share. The company has sold more than 1.60 million vehicles in the country and it expects a growth of almost 15% along with exports.
  • The second-largest car maker in India, Hyundai Motor India has sold more than 5 lakh vehicles for the second time in a row. The total sales for the auto manufacturer stood just above 5.27 lakh units. The growing demand in the domestic and international markets has resulted in Hyundai’s Chennai plants working at full capacity.
  • Mahindra and Tata Motors stood at third and fourth places as far as car sales for the year 2017 are concerned. Mahindra sold more than 2.42 lakh units while Tata Motors sold 1.91 lakh vehicles in the country. Mahindra only released facelifts and additional variants the last year. But Tata Motors followed a more aggressive sales strategy, launching three new cars, the Tata Hexa, Tata Tigor, and Tata Nexon. Both companies are also looking forward to supplying electric cars in the coming years.
  • Honda Cars India and Toyota Kirloskar had decent sales, despite the taxation policy changes that were effective in 2017. Both companies supply hybrid cars to the automobile industry in India, and the extra cess that was imposed on these vehicles had resulted in Toyota halting the production of the Camry hybrid sedan.
  • Renault India saw a drop in sales, selling only 1.12 lakh units last year. The last quarter of the calendar year saw the launch of the Renault Captur, as the company looked to strengthen its position in the crossover market.
  • The sales of Ford India grew after the introduction of the Ford Ecosport, and the company sold 87,578 units last year - an aggregate of 2.71% of the market share. The company has also improved its exports from the country as is evident from its robust export figures in 2017.

Towards the last quarter of 2017, most of the auto manufacturers have increased prices of vehicles across segments by 3-5%. This is due to the hike in input costs, including commodity prices. India is expected to emerge as the third-largest market for automobiles by the year 2020, when it would be capable of selling up to 5 million vehicles in a year.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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