As per the Economic Survey 2023-24 tabled in Parliament, rural consumption growth has gradually picked up pace during the quarter ending March 2024. Citing the data from Federation of Automobile Dealers Associations (FADA), the survey stated that two and three-wheeler and passenger vehicle sales also registered an uptick in FY24.
Citing the FADA data, the latest survey revealed that out of the 175,000 units of two-wheelers sold during FY24, nearly 1,02,000 units were sold in the rural market. Furthermore, nearly 50 of the total three-wheelers sold during last fiscal were in rural markets. Furthermore, close to 40 percent of Passenger Vehicle retails were in the countryside at 14,73,403 units, as per FADA.
“Urban demand conditions remain strong, as reflected in various urban consumption indicators such as domestic passenger vehicle sales and air passenger traffic. rural consumption growth has gradually picked up pace during the quarter ending March 2024,” mentioned the survey.
The survey mentioned that the automobile industry was helped by multiple government schemes in the fiscal year 2024 (FY24) during which the country produced around 49-lakh passenger vehicles, 9.9-lakh three-wheelers, 214.7-lakh two-wheelers, and 10.7-lakh commercial vehicles.
Passenger vehicles, such as cars and utility vehicles, experienced significant growth in the first half of the last decade. However, the pandemic had a substantial impact on all segments of the automotive industry.
“While passenger vehicles quickly recovered, the recovery period for two-wheelers, three-wheelers, and commercial vehicles is longer,” the Survey tabled in the Parliament said, adding, “Cars and utility vehicles (UVs), three wheelers, two wheelers and commercial vehicles are currently expanding as seen in the growth rates of recent years.”
The latest Economic Survey also pointed out that the growth in the value of domestic production and consumption of automotive parts moderated during FY20 to FY23, compared to the previous five years.
“The production of auto components depends on the dynamics of the domestic and export markets. The auto components sector closely follows the trends in automobile production. The pandemic affected the automobile sector considerably, which weakened the demand for automotive parts and, hence, their pace of expansion.
Meanwhile, the survey revealed that the Production Linked Incentive (PLI) scheme for the automobile and auto components sector has attracted investment proposals worth Rs 67,690 crore, out of which Rs 14,043 crore had already been spent by the applicants. The scheme aims to generate 1.48 lakh jobs, with 28,884 jobs created by March 31, 2024. So far, 85 applicants have received approval under the scheme.
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