Indian auto sales saw a steep decline of 11.35% in August 2021 to close with cumulative sales of 15,86,873 units as compared to 17,90,115 units in the same month last year, according to the data released by Society of Indian Automobile Manufacturers Association (SIAM).
It is to be noted that the total domestic sales data are the wholesale dispatches from factories to dealers and only comprises passenger vehicle, two-wheelers and three wheelers as commercial vehicle data is released quarterly.
Industry experts indicate that the overall fall in sales is the result of the two-wheeler segment facing tremendous pressure owing to high fuel inflation and escalating cost of ownership (due to commodity price pressures), which continue to impact sentiments.
The segment, which comprises 80% of the total sales, declined by 14.63% to 13,31,436 units in August 2021 compared to 15,59,665 units in the same month last year.
India Ratings and Research has done the downward revision for two-wheeler segment mainly on account of reduced disposable income, especially of the buyers of entry-level segment amid the widespread impact of COVID 2.0, deferral in reopening of colleges and workspaces, thus limiting travel as well as increased cost of ownership.
On the other hand, the passenger vehicle segment, which is facing supply mismatch issues due to shortage of semiconductors posted a 7.55% growth at 233,224 units in August 2021, against the ales of 215,916 units in the same month last year.
Interestingly, sales of utility vehicle surpassed sales of passenger cars last month. Out of the total passenger vehicle sales, UVs accounted for 112,863 units compared to 108,508 units of passenger cars in August 2021. This clearly highlights the continuous upside of demand for SUVs among Indian customers.
|Categories||August 2021 Domestic Sales||August 2020 Domestic Sales||%Change|
|Utility Vehicles (UVs)||112,863||81,842||37.9|
|Total Passenger Vehicles (PVs)||232,224||215,916||7.55|
|Total Three Wheelers||23,210||14,534||59.69|
|Electric Two Wheelers||1,013||215||371.16|
|Total Two Wheelers||1,331,436||1,559,665||-14.63|
|Grand Total of All Categories||1,586,873||1,790,115||-11.35|
Impact of supply side challenges
Rajesh Menon, Director General, SIAM said the Indian automobile industry is reeling under pressure due to supply chain challenges. The global semiconductor shortage continues and now it is having an acute impact on output across the auto industry.
In addition, high commodity prices are increasing the cost of production. Against such strong headwinds, SIAM members are working hard to meet customers’ demand and expectations, while ensuring safety of its people across the value chain.
India Ratings and Research (Ind-Ra) has maintained an improving outlook for the auto sector for FY22 as the revival across segments is expected to continue in in H2 FY22, aided by a recovery in consumer sentiments, increased preference for personal mobility and macroeconomic tailwinds.
However, Ind-Ra has revised auto volumes growth forecast to 12-16% YoY from the initial growth forecast of 16-20% YoY. The downward revision is mainly on account of a revision in the growth forecasts for two-wheelers and passenger vehicles to 10-14% (initial estimate: 16-20%) and to 15-18% (initial estimated: 18-22%), respectively. Growth forecast for commercial vehicles is maintained at 20-25% YoY for FY22.