In August 2024, Indian carmakers increased production while dispatches and sales declined, reflecting weakening demand in the world’s third-largest automotive market. Passenger vehicle production grew 0.7% year-on-year to nearly 3.77 lakh units, but dispatches to dealerships dropped by 1.78% to 3.53 lakh units, according to the Society of Indian Automobile Manufacturers.
Retail sales, measured by vehicle registrations on the VAHAN website, fell 4.53% year-on-year to 3.1 lakh units in August 2024, as reported by the Federation of Automobile Dealers Association (FADA). This resulted in a 60,000-unit gap between production and actual sales, worsening the inventory pile-up at dealerships.
FADA revealed that dealerships are burdened with unsold stock worth Rs 77,800 crore, which equates to 78 lakh vehicles or 70-75 days of inventory. The sluggish sales, partly due to an unprecedented monsoon, now pose a risk to the upcoming festive season.
In August 2024, the Indian automobile industry witnessed robust growth in two-wheeler and three-wheeler sales, but passenger car sales saw a slight decline. According to data released by the Society of Indian Automobile Manufacturers (SIAM), the sale of scooters and motorcycles grew significantly, while the car segment struggled to maintain momentum.
Two-Wheeler Sales Surge by 9.3%
Two-wheeler sales in August saw a 9.3% rise, reaching 17,11,662 units, compared to 15,66,594 units sold in July. This growth was primarily driven by strong demand for scooters. In the scooter segment, 6,06,250 units were sold in August, marking a 10.4% increase from 5,49,290 units sold during the same period last year. The increase in demand for two-wheelers highlights the growing preference for affordable and fuel-efficient vehicles in urban and rural areas.
Three-Wheeler Sales Also on the Rise
The three-wheeler segment saw a 7.7% rise in sales, with 69,962 units sold in August, up from 64,944 units sold in July. The increase in three-wheeler sales suggests a steady recovery in the commercial vehicle segment, catering to last-mile connectivity and urban transport.
Passenger Vehicle Sales Decline by 1.78%
Contrary to the growth in two-wheeler and three-wheeler segments, passenger vehicle sales recorded a decline. Car sales in August fell by 1.78%, with 3,52,921 units sold compared to 3,59,228 units in July. The dip in car sales can be attributed to factors such as rising interest rates, inflation, and supply chain constraints affecting the availability of certain models.
Factors Impacting the Industry
The overall performance of the automobile industry in August reflects the varying dynamics across different segments. While two-wheelers and three-wheelers showed strong growth due to increased demand and ease of mobility, passenger vehicles faced headwinds due to economic uncertainties and high ownership costs.
Looking ahead, the festive season may bring some relief to the car segment as consumers typically make big-ticket purchases during this period. However, sustained growth in the two-wheeler and three-wheeler segments will depend on factors such as fuel prices, rural demand, and the government’s policy on electric vehicles.
For now, the Indian auto industry continues to navigate a complex market environment, with some segments thriving while others face challenges.
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