NCR registration ban: Utility vehicle sales face speed breakers

The speeding demand for utility vehicles (UVs) has hit a bumpy road in the month of December, partly due to the impact of the registration ban on diesel passenger vehicles of 2,000 cc and above in the National Capital Region (NCR). The ban, imposed by the Supreme Court on December 16 to address deteriorating air quality, is in place till March 31. Almost three out of every four UVs sold is estimated to be diesel-driven and those with the specified engine capacity banned by the apex court have stopped selling in major markets like Delhi and Gurgaon.

Helped by new launches such as the Hyundai Creta, Maruti S-Cross and the Mahindra TUV300 in the second half of last calendar year, the growth in the UV segment had picked up. Compared to a decline in the May-September period, the UV segment registered high double-digit growth in both October and November. In October, the growth stood at 21 per cent and in November, it was almost 20 per cent. In November, growth rate in UVs also overtook the growth rate in passenger cars. This has reversed in December.

While the exact industry data is yet to be compiled by the Society of Indian Automobile Manufacturers, experts pointed out that the UV segment is estimated to have declined by around two per cent in December, after two high-growth months. "Sales of most Mahindra vehicles such as Scorpio, Xylo, XUV500 and Bolero have halted in NCR. So is the case with Toyota as sales of Innova and Fortuner have been nil in these markets," said an industry executive.

After reporting sales growth of 19 per cent and 36 per cent, respectively, in October and November last year, M&M's sales in December saw a moderate growth of one per cent. Toyota saw sales decline by 11 per cent in the same month. "The monthly sales were considerably affected by factors like the ban on registration of diesel vehicles with engine capacity of more than 2,000 cc in Delhi and NCR, where Toyota is present significantly," Toyota said on Friday.

While registration of diesel cars and UVs of 2,000 cc and above are banned by the apex court, dealers in NCR point out that buyers are showing reluctance in buying diesel vehicles below 2,000 cc as well.

Many apprehend some restrictions on the usage of diesel vehicles in the future.

Another reason behind the decline, industry officials said, could be the Chennai floods which impacted production and dispatches of UVs at companies like Hyundai (Creta), Ford (EcoSport) and Nissan (Terrano), etc. In the last financial year, the growth seen in UVs and passenger vehicles was identical at about five per cent. For the April-November period of the current year, however, growth in sales of passenger cars is much higher at about 11 per cent against a three per cent in UVs.

UVs account for one-fifth of the passenger vehicle market in India.

UVs, passenger cars and vans are three segments of the passenger vehicle market.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel