Autorickshaw sales in India finally recover from the GST setback

Reclaiming lost ground slowly.
Reclaiming lost ground slowly.
Image: Reuters/Pawel Kopczynski
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After a brief lull, autorickshaws are back in the reckoning in the Indian auto sector.

Sales of the three-wheeled vehicles increased 54% year-on-year in April-June 2018, according to data published by the Society of Indian Automobile Manufacturers. Within the three-wheeler segment, passenger carrier sales increased 64.48% while those of goods carriers rose 21.35%.

Three-wheelers are a key mode of transport—of goods and passengers—in both rural and urban India.

“If you look at the earlier few years’ figures, the demand has been muted. So this jump is because of a base effect,” said Kumar Kandaswami, a partner at audit and consulting firm Deloitte.

Last June, sales had plummeted by 24.75% ahead of the introduction of the goods and services tax (GST).

“In June last year, dealers liquidated the stocks and manufacturers didn’t produce fresh stock because GST was launched in July and nobody wanted to carry their stocks forward,” said Puneet Gupta, associate director with global information provider IHS Markit.

In any case, a low base wasn’t the only factor at play here.

A pick up in the logistics and fast-moving consumer goods sectors since the implementation of the new tax regime has also revived three-wheeler demand. “Post GST, the inter-state transfer of goods and services have become more seamless which has impacted growth,” said Darshini Kansara, research analyst at Care Ratings.

Rural consumption, which has been rising at twice the urban rate for some time now, also has a direct effect on three-wheeler demand in India, according to Kandaswami.

Then there’s the government’s huge push in the infrastructure sector. ”There’s a lot of money being put in the infrastructure sector, which has given a boost to goods carrier vehicles,” said Gupta.

For the overall automobile sector, which suffered a bad 2017 due to demonetisation and the effects of GST, things have been improving, too.

“Markets are doing relatively better and the overall demand situation, too, is good now. People are also more confident of the interest rate situation. Macro conditions are comparatively better, hence you see it reflected in the automobile sector as well,” Gupta said.