Domestic passenger vehicle sales declined by 3.43% in November due to subdued consumer sentiment following rise in fuel prices and high interest rates.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales stood at 2.66 lakh units last month compared with more than 2.75 lakh units a year earlier. While car sales were down 0.91% to more than 1.79 lakh units, those of utility vehicles fell 10% to 69,884 units and van sales were marginally up at 16,333 units.

 We have been witnessing flat growth in PV sales for the last couple of months due to factors like high interest rates and rising fuel prices. However, fuel prices have started to come down and we expect to see its positive impact going ahead,  SIAM director general Vishnu Mathur said.

Ashish Modani, assistant vice president, Corporate Sector ratings at ICRA said,  The PV sales are likely to remain tepid in the near term, with some improvement expected during Q4 FY2019. Unlike the CV sector, where NBFCs play a vital role in retail financing, PV retail sales are largely funded by banks and hence liquidity related pressure shouldn t have any material impact on PV sector.  He added that the demand from the rural market remained a key sensitivity to watch out for, whereas urban demand was likely to remain muted over the next few months.

Vehicle sales across categories registered a 5% growth to over 20.38 lakh units from more than 19.40 lakh units in November 2017. Sales of two-wheeler sales in November rose 7.15% to more than 16.45 lakh units.

While motorcycle sales increased by 9.36% last month to more than 10.49 lakh units, sales of scooters were up 3% to more than 5.21 lakh units.

Sales of commercial vehicles grew 5.71% to 72,812 units against 68,876 units in the year earlier. year-ago month

Pointing out that overall the sector had shown a growth of 5% driven by two-wheeler and commercial vehicle sales, Sridhar V, Partner, Grant Thornton India, said the  strain is visibly caused by multiple factors most important of which is the increase in cost of financing and the availability of finance from NBFC. This is also evidenced by a sequential de-growth, which has been all pervasive, including in the two-wheeler and commercial vehicle segment.