Hinterland automobile sales drying up on deficient rains
India’s economy seemed to be sputtering amid worrying signs of weak consumer spending. Shop-end data show that households were not buying goods at a pace to pull growth in the broader economy.punjab Updated: Oct 10, 2015 16:09 IST
India’s economy seemed to be sputtering amid worrying signs of weak consumer spending. Shop-end data show that households were not buying goods at a pace to pull growth in the broader economy.
A back-to-back drought this year has precipitated worries and it is showing up in industrial output and sales data.
Sales of tractors, two wheelers, SUVs and light commercial vehicles contracted during April-September 2015 compared to last year, mirroring flat or falling farm income.
When rain-dependent farm output is robust, rural income and therefore spending on almost everything – television sets to gold – goes up. This creates demand for manufactured goods, which in turn helps the general economy.
For example, more than 70% of all motorcycles and about 44% of TV sets are sold in rural India. Without this demand, industrial growth slows down.
Data released Friday by industry body Society of Indian Automobile Manufacturers (SIAM) showed that people have bought fewer two-wheelers, SUVs and light commercial vehicles so far this year compared to the previous year. Passenger vehicle sales grew at a sluggish 6.22% in the first six months, year-on-year, against high double-digit growths of previous years.
Two-wheeler sales declined by 0.36%, and SUV sales by 2.56% in April-September 2015 compared to the previous year.
Likewise, sales of light commercial vehicles (LCVs), which provide last mile connectivity, and tractors dipped by 7.4% and over 16% in the same period.