FY17 has ended as the most eventful year for the auto industry. The second half of the fiscal began on a strong positive note owing to improved consumer sentiments following the Seventh Pay Commission, normal monsoon after two successive years of deficit rainfall, cheaper financing costs, low fuel prices and healthy replacement demand owing to the diesel car ban. But the demonetisation announcement in November 2016 threw a spanner in the works, leading to de-growth for the industry in December. In Q3, according to a report by Care Ratings, total auto sales fell 17% q-o-q on the back of about 20% decline in two-wheeler and three-wheeler sales owing to the liquidity crunch. CV and passenger car sales declined marginally by about 2% and 4.7% during the period. Though the full year numbers are yet to be declared, FY17 is likely to throw up mixed fortunes for the sector with the two-wheeler segment seeing just 6% growth in the nine months, compared with 10% for passenger vehicles, and 4% for commercial vehicles. The only strong double-digit growth was clocked in tractor sales. How FY18 pans out will depend on how the monsoon plays out this year. And from the looks of it, the news is not good with forecasts predicting a below par monsoon.
Hit and run
The auto industry’s turbulent journey is aptly captured in FY17 numbers
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