Eastern zone emerges fastest-growing market for auto firms; PV sales up 17%

The smallest contributor to domestic car sales by region, the eastern zone, is now the automobile industry’s fastest-growing market, thanks to a rise in consumer spends. The region’s passenger vehicle, or PV (cars, vans, and utility vehicles, or UVs) sales grew at 17 per cent in 2017-18 (FY18), compared to a 12 per cent growth in the North, 6 per cent in the West, and 3 per cent in the South. The trend has continued in the current year. Of the eight states that grew more than 30 per cent in the first quarter (Q1) this year, five (Assam, Bihar, Sikkim, Nagaland, and Mizoram) happen to be in the East.  

The data shows that the industry’s PV sales in the eastern region surged 27 per cent during the April-June quarter of the current financial year. The western region, the biggest by volume, saw a growth of 18 per cent. The northern and southern zones clocked a growth of 20 and 19 per cent, respectively. The eastern region accounts for about 12 per cent of the industry’s total sales and therefore, low base is a factor in high growth.

But there is a bigger picture to this expansion. An analysis of the absolute volume growth across the four regions during FY18 shows that the second-biggest incremental volume growth came from the East. The Society of Indian Automobile Manufacturers’ data shows additional sales of 58,200 units took place in the eastern region last year, compared to 2016-17. In the West and the South, the additional volume was 55,500 and 24,600 units, respectively. Only the North was ahead with 100,900 units.

The growth seen in the East was much higher than the national average growth of sub-8 per cent in FY18. It is also higher than the average growth of 20 per cent in the April-June quarter. The impressive growth in some of the eastern states has few comparable peers in the rest of the country. Both Bihar and Jharkhand grew at 22 per cent each last year. Odisha and Tripura posted growth of 23 and 24 per cent, respectively. Manipur, though a very small market, grew at 43 per cent.  Assam also saw a high double-digit growth.

S N Barman, vice-president, (sales, marketing & customer support) for passenger vehicles at Tata Motors, said the company has witnessed a growth of 32 per cent and 150 per cent in the hatchback and UV segments, respectively, in the eastern region during the first five months of 2018-19 (FY19), outpacing industry growth. “Tata Motors’ success in the region can largely be attributed to increased consumer spending in rural and tier III markets. With a market share gain of 1.4 per cent, Tata Motors has grown by 49 per cent in the east zone in FY18, surpassing industry expectations. During Q1 of FY19, the company saw a growth of 50 per cent, against an industry growth of 27 per cent in the eastern region,” Barman said.

Tata Motors has 150 sales and service outlets in the eastern zone and it plans to take it to 200 in a year. “The East has always been an important market for us and our strong growth in the region is a step in the right direction. Given that the tier III markets have contributed largely to our growth in the eastern zone, our emphasis will remain on these cities for the current fiscal year,” added Barman. 

A Hyundai spokesperson said growth in the eastern region is majorly driven by agricultural growth. “Gross domestic product growth (GDP) rate of the eastern region has been higher than the national GDP growth rate. The services sector growth has also recorded a high growth in the region. All these supported the PV industry in FY18 and a similar trend is expected in FY19 as well,” the spokesperson added. 

The Korean carmaker said it has seen a growth of 19 per cent in the eastern region during the January-August period of 2018, against an overall growth rate of single digits. Hyundai has 211 service points and 166 dealerships in the eastern zone and plans to expand its reach.