What’s the best part about a protracted election campaign period when business and policy activity goes into a limbo and retail sales slow down? If you believe the doyens of India’s automobile industry, it’s the promise of future bounty. “The pent-up demand!” exclaimed Vinod Aggarwal, president of the Society of Indian Automobile Association (SIAM) in New Delhi on Friday afternoon.
“Decision making (and sales) slow down during elections, but it means a huge pent-up demand post-June,” Aggarwal explained. “That coupled with good monsoon could augur well for categories like commercial vehicles and two-wheelers to to do better.”
Therein lies the crunch. India’s auto industry may appear to be growing — sales figures for financial year 2024 (April 2023 to March 2024) shows an increase of 12.5 per cent overall to 2.3 crore from 2.1 crore.
But go into the finer details and the worry lines are simply too clear. The biggest, of course, is the fact contrary to the rosy ‘India Shining’ impression created on mass and social media — sales of commercial vehicles, an indicator of commercial activity, as well as those of two wheeler bikes, an indication of rural confidence, still leave a lot to be desired.
Both categories have not shown solid indications of having recovered —two-wheeler sales are growing slowly, but still way lower than the peak sales achieved back in 2018-19.
Commercial vehicles growth have been more in passenger carriers (38 per cent) while good carriers, the requisite for business activity, has declined on 2024 compared to 2023.
Another area of concern for the overall economy is that of exports. Overall exports are down by 5.5 per cent, with stark contraction even in categories like SUVs, where otherwise domestic sales have been stellar.
All types of commercial vehicles and three wheeler passenger and goods carrier have contracts, some as much as nearly 29 per cent. Geopolitical issues like ongoing wars as well as including forex issues faced by countries which usually import vehicles from India were the reasons touted by SIAM officials for this.
This led SIAM secretary general Rajesh Menon to admit, “There is growth only in passenger vehicles, de-growth in goods segment.”. The figures raise question over the state of the economy, despite top line GDP growth.
However, Aggarwal believes in keeping his chin up, feeling the end of elections, pent-up demand, good monsoons etc would proffer ‘hope’ for a recovery in the coming months.
