Passenger vehicle sales in India went up by 14 per cent in August, while two-wheeler sales increased 3 per cent, as data released Friday morning by the Society of Indian Automobile Manufacturers (SIAM) show. If you take individual car companies, for example, growth figures are even higher. Maruti Suzuki, the nation's top carmaker, for example, sold 1.24 lakh vehicles, a healthy increase of more than 17 per cent. For others like Hyundai India, it was higher, at 20 per cent.
Then why are the top honchos in India's auto industry not smiling yet?
It is more a case of present uncertainty and the 'anything goes' scenario that the future holds. Reading between the lines throws up the morass the industry is finding itself in. For one, while cars and bikes do seem to show improvement, segments like three-wheelers and commercial vehicle segments—both crucial barometers of economic activity—are tanking big time. For example, in the three-wheeler segment, which also includes goods carriers, the decline is as big as 75 per cent. And if one takes the figures for the past five months, the impact of the lockdown becomes even clearer, with all categories showing a massive decline. While the decline is nearly 50 per cent for both four-wheelers and two-wheelers, it is an astounding 84 per cent when it comes to three-wheelers.
Second, the year-on-year growth rate is based on previous August sales, when the auto industry was already caught up in the economic slowdown that had hit the Indian economy. “It is to be recognised that the base figures in August 2019 themselves was pretty low, as industry had shown a de-growth of about -32 per cent in passenger vehicles and -22 per cent for two-wheelers then, over 2018,” said Kenichi Ayukawa, MD & CEO of Maruti Suzuki and the new president of SIAM.
Then, there is the absolute dismal drop experienced during the lockdown, and the slow pick-up seen since then. The discrepancy between sales figures by two industry bodies also compounds matter. While SIAM gives industry's calculation of vehicles manufactured and shipped for sale, the Federation of Automobile Dealers Association or FADA looks only at figures of actual registration of vehicles after sale. In fact, according to FADA, sales in August improved only by nearly 4 per cent compared to the previous month, while the drop year-on-year was almost 27 per cent.
For India's automobile sector, the crucial test would be the upcoming festive season, and even the months beyond. Industry is positive that the coming festive season will pave the way for faster revival of the industry.
However, many industry leaders and analysts are also wary of pinning too much on the festive season spike. Figures from the last two years of economic slowdown show that sales picked up in the month of Diwali as consumers flush with bonuses made their planned purchases, but then dropped in the ensuing months. The worry is that a similar pattern this year, particularly as the industry has scraped the barrel during the past few months, would mean it would be a long (and tough) haul that awaits it.
