Automobile sales continue to ride the momentum in Q1

New Launches continue to drive PV sales during Q1 FY 2022-23

Sales of passenger vehicles (PVs), two-wheelers, and three-wheelers went up in the domestic market during the first quarter (Q1) of this financial year, riding on product launches, huge order backlogs (largely of SUVs), bullish consumer sentiments, and an acceleration in economic activity.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), overall auto wholesales in the domestic market went up by 11 percent in Q1 FY24 to 54,98,602 units from 49,35,910 units in the same period last year. The numbers include 995,974 units of PVs, up 9.4 percent from 910,495 units in Q1 FY23.

The growth in PVs was largely driven by the robust sales of utility vehicles (UVs), which accounted for nearly 55 percent of the sales. UV sales climbed 18 percent year-on-year (YoY) from 464,556 units in Q1 of the previous financial year.

Rajesh Menon, Director General, SIAM, said, "The passenger vehicle segment crossed two million units (in sales) in the first half of the calendar year for the first time."

The three-wheeler segment saw a whopping growth of 89 percent, primarily led by passenger carriers, e-rickshaws, and e-carts. A total of 1,44,475 units of 3Ws were sold, which is 68,182 units more than in the year-ago period.

The commercial vehicle (CV) segment, however, witnessed a decline of 3.3 percent on the back of sluggish sales of light commercial vehicles (LCVs). The sales of CVs dropped to 2,17,046 units this year from 2,24,488 units in the same quarter last year.

In the two-wheeler space, sales surged by 11.2 per cent to 4,140,964 units, compared to 3,724,533 units in the year-ago period.

In two-wheelers, the slowdown in scooter sales was offset by the pick-up in demand for motorcycles, primarily through the changing customer preference in the premium two-wheeler space. A total of 4.14 million two-wheelers were sold, up 11 percent from the same period last year.

Menon of SIAM however, maintained, "Two-wheelers also posted a growth of 11.2 percent in this quarter, compared to last year, but are still lower than 2016-17 levels. Domestic sales of three-wheelers in Q1 of 2023-24 grew by 89.4 percent compared to last year, albeit on a low base, but are still lower than the 2018-19 levels. CVs have degrown by (-)3.3 percent in this quarter, compared to Q1 of last financial year."

Vinod Aggarwal, President, SIAM, noted that beginning 1 April, 2023, the auto industry seamlessly transitioned to the very stringent BS-6 Phase 2 emission norms, reflecting the "commitment" of the industry towards the "environment".

The Indian auto industry also demonstrated a resilient sales performance in June, indicating steady growth in domestic vehicle wholesales across various segments. According to SIAM data, domestic PV sales recorded a 2.2 percent on-year rise in June to 3,27,497 units. PV dispatches to dealers in June 2022 stood at 3,20,985 units. Additionally, total two-wheeler sales jumped by nearly 2 percent to 13,30,826 units in June, compared to 13,08,764 units a year ago, SIAM said.

The auto industry body also revealed that three-wheeler wholesales jumped nearly two-fold to 53,019 units in June from 26,701 units a year back.

Two-wheelers also posted growth of 11.2 percent in this quarter, compared to last year, but are still lower than 2016-17 levels. Domestic sales of three-wheelers in Q1 of 2023-24 grew by 89.4 percent compared to last year, albeit on a low base, but are still lower than the 2018-19 levels. CV sales have degrown by (-)3.3 percent in this quarter, compared to Q1 last financial year.

"Overall passenger vehicles, two-wheelers, three-wheelers, and commercial vehicles have performed well in Q1 of 2023-24, although some sub-segments have shown slight momentary decline compared to Q1 of last year," stated Aggarwal, adding, "With expectations of a reasonable monsoon, which has now covered most parts of the country, coupled with lowering inflation, we expect the economy to continue to grow, which in turn should help the auto sector." He, however, maintained that high interest rates remain a concern.

SIAM also indicated that sales of entry-level vehicles have also dropped due to buyers’ migration to SUVs and bigger cars. The industry body also stated that sagging exports due to foreign currency fluctuations are "worrisome" for the industry.