Sales of SUVs grew 18% in the June quarter offsetting the decline in sales of small cars.
Alisha Sachdev
Published12 Jul 2024, 08:47 PM IST
SUVs constituted 63% of all passenger vehicle sales to 646,000 units in the June quarter, the highest ever for a single quarter so far, according to data. (Photo: Bloomberg)
Growth in passenger vehicle sales moderated to 3% year-on-year at 1.03 million units in the first quarter of fiscal year 2024, with a steep 17.5% drop in sales of small cars sold during the quarter compared to the same period a year ago.
The sales of sport utility vehicles (SUVs), on the other hand, grew 18% in the same period, offsetting the decline in small car sales. Sales of vans grew 9% year-on-year (y-o-y). SUVs constituted 63% of all passenger vehicle sales to 646,000 units in the June quarter, the highest ever for a single quarter so far, data released by industry body Society of Indian Automobile Manufacturers (SIAM) showed on Friday.
While passenger vehicle sales moderated, the two-wheeler saw a strong and even growth across segments.
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Two-wheeler dispatches in the first quarter of FY24 rose to 4,985,631 units, up 20% compared to 4,140,964 units in the same quarter last year, slowly inching back to their pre-covid peak levels.
Read more: Will EV charging finally get the attention it deserves in FAME-III?
"Within two-wheelers, scooters have posted even higher growth based on some green shoots of recovery in entry level two-wheelers," Vinod Aggarwal, president, SIAM, said. “We are seeing green shoots in the rural regions,” Aggarwal said.
Aggarwal also outlined that SIAM is seeking a higher capex outlay in the Union Budget for continued infrastructure spending to boost commercial vehicle (CV) sales, measures to stimulate the rural economy as the automotive sector witnesses a revival in rural demand, and incentives in the form of the FAME-III policy to aid demand for electric vehicles (EVs).
“Our biggest expectation is that the government should continue its growth agenda. We hope to see high capex spending, which was already 33% higher in the last Union Budget and 11% higher in the interim budget, as spending on infrastructure has a great multiplier effect for the economy,” he said.
“The rural economy is still not doing so well. Entry level cars, light commercial vehicles, entry-level two-wheeler growth rates are subdued. Entry-level cars are far from their peak levels. We expect the government should do something more for the rural economy,” Aggarwal told Mint.
Finally, on the electric vehicle technologies, the sector expects the government to come out with a comprehensive FAME-III scheme covering the full gamut of all automotive categories so there is a continuous migration to EVs, he added.
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“Where government support has come down, EV adoption falls. We are still at a nascent stage of EV adoption. We have to do more work on charging infrastructure too,” he said.
According to Aggarwal, India's automotive sector needs to drive towards more inclusive growth by spurring affordability for entry-level customers.
Three-wheeler wholesales rose 14% to 165,081 units in the first quarter against 144,530 units in April-June last fiscal, SIAM data showed.
Commercial vehicle dispatches saw a moderate increase of 3.5% y-o-y to 224,209 units in the quarter.
Dispatches of units across categories rose 16% to 6,401,006 units in the first quarter as compared with 5,498,752 units in the year-ago period.
"With a positive outlook on the monsoon and coming festive season, the automotive sector is poised to perform better in the balance part of the year," Aggarwal stated.
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Asked about SIAM's stand regarding the dealers seeking better inventory management from original equipment manufacturers (OEMs), he noted that fluctuations keep happening and the industry body does not see it as a concern.
"We should not worry too much about the stocks because I am sure all the respective companies where the stock level is high will take corrective action," he said.
It is not like that the stock levels will be high at all the companies, as some companies, in anticipation of higher sales, might have sold more units to their respective dealers.
To a query related to the Uttar Pradesh government announcing 100% waiver of registration fees on hybrid vehicles and its impact on EV sales, he stated that there were two different views emerging at the OEM level.
For June alone, domestic passenger vehicle wholesales rose by 3% y-o-y to 337,757 units.
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The overall passenger vehicle (PV) dispatches from companies to dealers stood at 327,788 units in June 2023.
Two-wheeler wholesales rose 21% to 1,614,154 units last month, as compared with 1,330,826 units in June 2023, as per the data issued by SIAM.