Auto sales on a high, but will elections play spoilsport?

Commercial vehicle sales are still slow in revival


Automobile sales in the country went up by a neat 15 per cent last month, with passenger vehicles (cars and vans) smashing an all-time record to hit nearly four lakh vehicles in January. The monthly retail sales figures were unveiled Tuesday by the Federation of Automobile Dealers Association (FADA).

However, a demand taper and a likely impact of a long drawn out election campaign, the industry worries, could likely have a slowdown impact in the coming months. This, combined with the fact that commercial vehicle sales are still slow in revival, means a lot will depend on the crop production season and how well the harvest will be in.

In more ways than one, this dependence on the rains and farm output stands testament to the K-shaped divergence in economy playing out since the pandemic, with one section of the populace faring way better than the majority (read: lower middle class and rural populace). This, in auto sales speak, plays out in some categories doing well compared to others. So while passenger cars charged ahead with a sale of 3.9 lakh units, amounting to a growth of 13 per cent year-on-year, commercial vehicles, on the other end of the spectrum and something that signifies robust all-round economic activity, was barely there at 0.01 per cent growth.

But a turnaround, however, ephemeral it may turn out to be before the rain gods make their call, seems to be in the offing. Interestingly, not only are sales in January better than that of December (traditionally, December is one of the peak festive sales period, while January-March registers less volumes), last month’s sales are an all-time high, beating out the previous high registered in the Diwali month of November 2023.

As a glimmer of hope, the two-wheeler segment has also registered robust sales in January after being in the downside of the K-shaped economy impact for long. FADA says many factors are responsible for this, from improved vehicle availability as well as new model launches and effective marketing, the good harvest leaving rural customers flush with cash, as well as the ongoing marriage season.

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