After 11 straight months of decline, sale of passenger vehicles in the domestic market rebounded to a marginal 0.28 per cent growth in October 2019, helped by the twin festivals of Navratri and Diwali falling in the same month. Commercial vehicles and two-wheelers however, stayed in the red registering a 23.3 per cent and 14.4 per cent decline, indicating that the overall economy was still grim.

Even in the passenger vehicle segment, the heavy lifting was done by utility vehicles that saw a 22 per cent increase in sales, thanks to a number of new products like the Kia Seltos, MG Hector, Hyundai Venue, Maruti XL6 and Mahindra XUV3OO bringing in incremental numbers. Sale of passenger cars was still down 6.3 per cent while the van segment registered a 35 per cent fall in sales during the month. Overall passenger vehicle sales stood at 285,027 units.

Aside from the wholesale figures that represent the vehicles dispatched by manufacturers from their factories to the dealerships, retail sales painted an even more optimistic picture. Retail sale of passenger vehicles sourced from government's VAHAN website showed a 13.9 per cent growth at 296,642 units. Retail sale of two-wheelers also grew by 8.9 per cent at 1,388,538 units.

"The industry really needs to switch to reporting to retail and not wholesale volumes. There are some strong signs of life in the market. And pipeline stocks have been slashed by controlling billings to dealers. Very appropriate stock levels now," Mahindra group Chairman Anand Mahindra had tweeted last Friday.

"From a like to like festive to festive season comparison over last year, we know that the industry has registered a positive growth in retail sales. New models and players like Kia and MG are adding to this positivity. We hope that it continues and November and December are also better than last year but just on the basis of one month we cannot say that we are out of the woods," says Rajan Wadhera, president, Society of Indian Automobile Manufacturers (SIAM).

Sale of heavy trucks and buses however presents a cause of concern. Even at the retail level the commercial vehicle segment that is considered to be a barometer of the overall economy, registered a similar 23.5 per cent decline in sales. Wadhera said unlike in passenger vehicles and two-wheelers, it cannot be attributed to only inventory correction anymore.

"It is not that the industry is sitting on big stocks anymore and an inventory correction is underway. This is now truly based on demand," he says. "Demand for good is prerequisite to sale of CVs and it represents what is happening in the economy at large. When not enough goods are there to be hauled around, sales will suffer and that is what the figures indicate."

"It shadows the economy. The change in axle loading norms (last year), better quality of roads and faster movement of goods has together created a additional capacity generation of 30-35 per cent. So there are more trucks and not as much goods for them. Unless growth comes to that order, we will not see a turnaround in that segment," Wadhera adds.

The unseasonal rains that have delayed the crop cycle in the country is blamed for the lacklustre two-wheeler sales.

"Once the money starts reaching the farmers in November, we should see an uptick in sales," he says.