We will cross the El Nino bridge when we come to it. But right now, the Indian economy is on a roll. That is the indication that production and sales of automobiles last month tell us.
According to figures released by the auto industry body SIAM on Tuesday morning, vehicle sales are hitting a new high, leaving the pandemic era lows a distant memory. India produced a total of 21.24 lakh vehicles in the month of May, registering the highest ever growth of 13.5% in May.
While sales have been consistently high for most categories -- the utility vehicle category, which includes the much-in-demand SUVs, went up from 1.16 lakh last year in May to 1.55 lakh last month. Total two-wheeler sales, which include bikes, scooters and mopeds went up to a robust 14.71 lakh in May 2023 from just 12.53 lakh in May 2022. The total itself of all vehicle sales, 18 lakh is up from just a figure of just 15.32 lakh last May.
There is ample good news in the figures for the overall economy, as auto sales are always considered reflective of the state of its health, and especially of individual consumer confidence and private consumption patterns. That way, the figures, particularly of two-wheelers as well as commercial carriers, augur well. While passenger carriers (including buses) shot up from around 20,000 to nearly double at 38,590, goods carriers, whose sales are indicative of trading and economic activity, shot up from 6,952 to 7,531. This is certainly comforting, coming after the pre and post pandemic years of sluggish growth.
Similarly, the pickup in two-wheeler sales is heartening, for that means generally that the rural economy is gathering pace. There were concerns in recent months that while urban centres were recovering, the rural areas, which primarily depend on agriculture and migrant labour remittance (domestically as well as from abroad) had not kept pace. The rise in bike sales from 8.19 lakh last May to nearly 10 lakh this May is clearly indicative of that.
Ironically, sales of sedans and hatchbacks (small cars) remained muted, dropping from 1.24 lakh last May to just 1.20 lakh this May. However, this could be read in conjunction with the up, up and away popularity of SUVs in recent years, which is registering record growths. Industry estimates that SUVs could form up to 55% or more of the total passenger vehicle segment in no time (they are presently at above 40%)
"All the segments viz. Passenger Vehicles, two-wheelers and three-wheelers have posted growth in double digits in May 2023, compared to May 2022. We anticipate this trend to continue supported by the prevalent economic environment," said SIAM president Vinod Aggarwal. "The Indian Automobile Industry is currently in a transition phase with new powertrain technologies offered to consumers ranging from electrified, bio-fuels and gaseous fuel driven vehicles which are being enabled through sound policies of the Government.”
SIAM director general Rajesh Menon however cautioned that while there is growth, they are "still lower than 2016-17 levels (for two-wheelers) and lower than the 2018-19 levels for three-wheelers." The performance of the monsoon, and how much impact El Nino will have, will be the next litmus test for Indian auto in particular, and economy in general.