The revival in the auto industry happened after two years of instability in the sector. The demand for vehicles has been on an increase since last year and has kept the growth steady to this year in India.
According to reports the increase in sales has been stated from all sectors. The momentum of sales in two wheeler, three wheeler, commercial and passenger vehicles is projected to increase in 2017. Achieving the sales growth of 2016 wouldn’t be possible this year due to demonetization and ambiguity concerning service tax as per a report by Dun & Bradstreet, though they didn’t provide statistics for the same. According to the report reasons for increase in sales where improving economy, demand in rural and semi urban markets, and lower cost of possession.
The growth rate of two wheelers was tremendous in 2016, which increased from 0.7 % of 2015 to 9.6 %. Similar increase was seen in cars at 7% and commercial vehicles at 7.6%.
New emission laws and demonetization might help increase in sales as per reports. Though the recovery period of two to three months is estimated after demonetization. The positive predictions for growth rate in sales is due to demand increasing in some sectors, releasing of 7th pay commission and significant expansion of cab operators. In the commercial vehicle sector growth rate was 6.3% in 2015 that increased to 7.7% in 2016. Some of the factors increasing demand would be replacement need, construction and mining, increased merchandise movement, and control on fuel prices and cargo rates.
Demand for heavy vehicles like tippers, construction trucks would increase due to the governments focus on infrastructure development.
