Boom time continues in Indian auto market, July sees growth across categories
The cheer and celebrations in the Indian automotive industry continues with data from the Federation of Automobile Dealers Associations of India for the month of July showing positive growth across all vehicle segments. The month saw a 10 per cent year-on-year growth in retail, continuing with the positive momentum from recent months.
The Indian automotive industry recently overtook Japan to become the third largest in the world, behind China and the United States. And while these two countries are still quite a fair distance ahead, the Indian automotive market is taking impressive strides forward as well. The passenger vehicle (cars) category has been impressive in particular with a slew of new and updated model launches across body types and price brackets pushing the pace. The two-wheeler category has been a source of concern but even there was a positive growth even in this category in the month of July.
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What has been helping the industry and market in recent times is while demand has remained strong, delivery timelines are steadily coming down. This, once again, is across segments and categories, as per FADA. Also impressive is that passenger vehicle sales increased despite severe monsoon and flood-like situation in many parts of north India hampering demand. And little surprise that SUV body types remain the main source of thrust for this rising demand.
Two-wheeler sales have received a shot in the arm as well. While electric two-wheelers may be finding increased favour, the petrol-powered options too are getting a whole lot of traction, as per FADA.
As far as the commercial vehicle (CV) category is concerned, there are both challenges and opportunities. Stock availability and a boost to infrastructure projects remain a key factor even if high vehicle costs and severe monsoon proved to be hindrances to demand in the month of July. Three-wheelers are faring stronger than most other type of vehicles with record sales in the month of July.
The Road Ahead
FADA predicts that August is likely to be yet another strong month for the Indian automotive sector considering that the festive period in the country will begin towards the third week of the month. A harmonious supply-demand equilibrium is likely to benefit the two-wheeler category in particular while introduction of new models will almost certainly help the passenger vehicle category grow in strength.
Demand for three-wheelers may only get stronger still and pent-up demand in the CV category will bolster prospects.
In terms of challenges though, the entry-level two-wheeler product sub category is particularly highlighted as a concern area by FADA. In the CV space, there are apprehensions regarding streamlined loan disbursements for buyers. Inventory level in PV has breached 50 days mark in anticipation of upcoming festival season and the slowdown in entry level car remains. A larger concern is the IMD's projection of a below-average rainfall in August, potentially leading to lower crop yields. This could impact the purchasing power, especially in rural regions.
