Utility vehicle sales go through the roof as SC hears case on diesel ban

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New Delhi: Sales of utility vehicles grew 42.83% in April, the fastest since November 2012.

Utility vehicles, which include sports utility vehicles (SUVs), multi-utility vehicles and vans, rose to 62,170 units over the year-ago period. The previous best was in November 2012 when utility vehicle sales had grown 70%.

In the year ended 31 March, sales of utility vehicles increased 6.25% to a record 586,000.

Since 2010-11, sales in this segment have grown at a compounded annual growth rate of 13%. Utility vehicles include diesel-fueled SUVs, with engine capacity of 2,000 cc and more, whose sales have been banned by the apex court in the National Capital Region (NCR) centered on Delhi. The share of SUVs in the overall sales of utility vehicles isn’t available.

On 16 December, the Supreme Court first imposed a ban on the sale of diesel passenger vehicles with engine capacity of 2,000 cc and above in NCR. The move was aimed at improving the air quality in Delhi, which the World Health Organization in 2014 ranked the world’s most polluted city.

In April, the court extended the ban until further orders. NCR accounts for 7% of total passenger vehicles sold in the country.

The apex court is expected to hear automobile manufacturers’ arguments against the ban on Monday.

“The point is why should a vehicle that meets all government norms be banned. We are not going to the court saying our industry is not doing well so please help us. We are going to the court against the Amicus Curie that has asked for extending the ban to all diesel vehicles,” said Vishnu Mathur, director, general of auto industry lobby Society of Indian Automobile Manufacturers (Siam).

Siam attributed the growth in sales of utility vehicles to launches of small sports utility vehicles such as Maruti Suzuki Vitara Brezza and Mahindra & Mahindra Ltd’s KUV 1OO, TUV 3OO and NuvoSport.

Sales of two-wheelers too grew at their fastest pace in 18 months. Siam said that urban demand continues to drive sales growth even as there is an uptick in consumer sentiment in rural areas.

Sales of two-wheelers grew 21.23% in April to 1.56 million units, according to data provided by Siam. The previous best was seen in September 2014 when the industry grew at 22.73%. Sales of motorcycles grew 16.24% to 1.02 million, while those of scooters grew 35.86%.

Siam added a note of caution. “Two-wheeler sales are up due to demand during the marriage season and a low base,” Mathur said.

“We will have to wait and see. Rural sentiment seems to have started improving. They are still not driving growth. Usually, marriage season brings in a very large uptick in sales. Worries are not over yet,” Mathur added.

Sales of passenger cars too grew for the first time in three months since January, to 1.62 lakh units in April, up 1.87% over the year-ago period.