In Short:
Passenger vehicle sales grew by 3% in the first quarter of 2024, with SUV sales up 18%, but small car sales dropped by 17.5%. Two-wheeler sales also saw a strong growth of 20%. SIAM seeks higher government spending on infrastructure to boost commercial vehicle sales and stimulate the rural economy. The sector also hopes for incentives to drive electric vehicle adoption.
Passenger Vehicle Sales Show Moderated Growth in Q1 FY24
In an interesting turn of events, the passenger vehicle sales in India saw a moderate growth of 3% year-on-year in the first quarter of fiscal year 2024. The total sales reached 1.03 million units during this period. However, small car sales experienced a substantial decline of 17.5% compared to the same quarter last year.
SUVs Lead the Way as Small Car Sales Decline
On the bright side, the sales of Sport Utility Vehicles (SUVs) witnessed a significant growth of 18% during the same period. This surge in SUV sales offset the decline in small car sales. Additionally, the sales of vans grew by 9% year-on-year. SUVs accounted for 63% of all passenger vehicle sales, reaching 646,000 units, the highest ever for a single quarter, as per data released by the Society of Indian Automobile Manufacturers (SIAM).
Two-Wheeler Segment Shows Strong Growth
While passenger vehicle sales showed moderation, the two-wheeler segment portrayed a strong and steady growth across all segments. Two-wheeler dispatches in the first quarter of FY24 rose to 4,985,631 units, marking a robust 20% increase from the same quarter last year, gradually inching back to pre-COVID peak levels.
Industry Expectations and Outlook
Vinod Aggarwal, the president of SIAM, expressed optimism about the industry outlook. He highlighted the need for increased infrastructure spending to boost commercial vehicle (CV) sales and stimulate the rural economy. Moreover, Aggarwal emphasized the importance of incentives such as the FAME-III policy to drive demand for electric vehicles (EVs) in the market.
Aggarwal also stressed the importance of inclusive growth in the automotive sector, focusing on affordability for entry-level customers.
Future Prospects and Challenges
With a positive outlook on the monsoon and upcoming festive season, the automotive sector is poised for better performance in the coming months. Regarding inventory management concerns raised by dealers, Aggarwal reassured that corrective actions would be taken by companies with high stock levels to address any fluctuations. He also touched upon the impact of government policies, such as the waiver of registration fees on hybrid vehicles by the Uttar Pradesh government, on EV sales in the market.
As the industry continues to navigate through challenges and opportunities, the focus remains on driving growth, innovation, and sustainability in the automotive sector.
