Improving economic growth, robust demand from rural and semi-urban markets and lower cost of ownership have driven sales in 2016, bringing in a much-needed recovery for the industry, after growth slumped in 2015, according to Industry experts.Sales will also be helped by higher replacement demand on account of the expected implementation of new emission norms and the impact of deferred purchases as a result of demonetization, the report adds.
The positive sentiment is driven primarily by the rural and semi-urban demand for two-wheelers and cars, driven on the back of good monsoons. Another boost up will be the 7th pay commission that will infuse around Rs 1.02 trillion of disposable income of over 1 crore employees. Another reason is the aggressive play by the cab aggregators who are expanding their operations extensively.
On commercial vehicles sales which recovered in 2015 with a growth of 6.3 per cent and 7.7 per cent in 2016, demand will be driven by replacement demand, construction and mining, increasing freight movement and moderation in fuel prices and firm freight rates.