Motown: May 2017

India had its best-ever auto sales for the month of May, with the industry logging double-digit growth, paced by the sustained demand for cars and the revival in sales of two-wheelers in the rural hinterland. With total volumes of 2.03 million units, the industry expanded 10% in the month.Two-wheeler sales increased 12% to 1.69 million units, while utility vehicles drove passenger vehicle sales higher by 8.6% to 2.51 lakh units.

Passenger car sales also were the highest ever for the fifth month of the calendar year. Commercial vehicle and three-wheeler sales growth showed decline because of pre-buying in the previous fiscal, masking the true market demand.

Passenger vehicles have been forecast to increase between 9 and 10% in 2017-18, and the industry's performance in this segment is currently on track to meet the goals. With the implementation of the GST, SUV and luxury cars are likely to pick up further on prospects of price cuts. Two-wheeler sales are likely to increase 9%, while truck and bus sales may increase about 7%. Smaller cars may also become slightly cheaper, ensuring higher sales in the future.

The rural areas account for a significant part of India's utility vehicle and SUV demand, and these are used both for transporting goods and passengers.

About a third of the sales for the country's biggest carmaker, Maruti Suzuki India, is generated in the rural areas, where the company deploys local salesmen at showrooms for the convenience of buyers. Mahindra & Mahindra, too, relies on the villages for about 40% of its sales. The proportionate share is even higher for two wheelers, with villages accounting for one in two vehicles sold in the country .

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