Car Sales Growing, Experts Thank Complaints Against Ola, Uber

Mukul Yudhveer Singh
08 Aug 2022
01:15 PM
4 Min Read

Experts credit complaints against Ola, Uber; Pent Up car demand due to recession; and the launch of international standard cars in India behind the success of the passenger vehicle sector in India.

FADA July 2022

Passenger vehicle (PV) sales in India during July 2022 were higher by 19.07% compared to the sales figures of July 2019 (Pre-COVID Times). A total of 2,50,972 PV units were retailed in the country in July 2022, against 2,10,775 PV units sold during July 2019. The sales figures sourced from the Federation of Automobile Dealers Associations (FADA) point out that July 2022 PV sales were down 4.66% to 2,50,972 compared to 263,238 passenger cars retailed in July 2021.

Structural changes that are taking place in the country are said to be the primary reasons for aiding the passenger car market in India, noted Vinkedh Gulati, President, FADA. He explained, 'About three-four years ago it was being said that the likes of Ola and Uber deploying cabs in the country is making people stay away from buying personal cars. Today, complaints against a lot of cab aggregators is one of the reasons that people are back to investing in personal mediums of mobility.'

Notably, the social media platforms are filled with complaints against cab drivers cancelling cabs at the last minute and, in some cases trying to cheat customers as well. As many as 2,482 official complaints were registered against Ola, and 770 grievances were registered against Uber during the period between April 1, 2021, and May 1, 2022 (National Consumer Helpline data).

The positive shift in the PV segment is also huge because it is one of the only two automobile sectors to have outnumbered sales during the pre-COVID times. For instance, the two-wheeler segment in India was down 27.86% in July 2022 compared to July 2019 sales. As against 1,399,532 two-wheelers selling in India in July 2019, only 10,09,574 were retailed in July 2022. The two-wheeler vertical is considered the backbone of India's automobile industry.

CATEGORYJULY'22JULY'21YoY %JULY'20% Change w.r.t JULY'20JULY'19% Change w.r.t JULY'19
E-RICK-CART (G)1,8971,08574.84%464308.84%319494.67%
3W (G)5,7216,171-7.29%3,11683.60%8,242-30.59%
3W (P)16,70810,82454.36%6,469158.28%40,024-58.26%
3W (PERSONAL)39375.41%18116.67%125-68.80%

*Only PV and Tractor sales have shown growth in India

Missing Out On Life

Gulati also thinks that the outbreak of COVID-19 has taught the importance of owning things in life. 'People had stopped buying cars and houses. The spending in the automotive and real estate sectors were dipping. However, the outbreak of COVID-19 has made people realise the importance of owning a house and a car.Cab aggregators might or might not come to you in emergencies, but your own car will always be of help in a situation of emergency. Additionally, the pleasure of owning and driving a vehicle cannot be felt sitting inside a cab,' he explained.

NITI Aayog expects the Indian real estate sector to reach a market size of $1 trillion by 2030. The sector will account for 13% of India’s GDP by 2025. On a similar note, Gulati believes that PVs upwards of 3.5 million units will get retailed in India in FY23. India saw retail of 2,726,047 PVs in FY22, 2,387,925 PVs in FY21 and 2,774,340Vs in FY20.

Car makers developing and launching international-standard PVs is one more reason that the Indian car market has been able to surpass pre-COVID figures in terms of sales. Gulati, giving reference to the recently launched Mahindra XUV 700 and Scorpio N, explained that, unlike the world markets where car innovation has started reaching a saturation point, the Indian car makers are launching more-modern cars. As a matter of fact, Mahindra had recently claimed to pre-book over 100,000 ScorpioN units, representing car sales of over INR 18,000 crore in terms of Ex-showroom value.

Subhabrata Sengupta, Executive Director, Avalon Consulting, is of the view that the pent-up demand of previous years has helped the car market register good growth. He said, 'Natural upswing in the market after two bad years plus pent up demand due to chip shortage resulted in growth.

Atul Chandel, Director, Autobei Consulting, resonating with Sengupta, feels that the demand and sales represent pending car purchases taking place now. 

SUVs Will Contribute A Lot

Another point to note in the increase in car sales is the inclining share of SUVs and compact SUVs. Gulati noted that the SUV share in car sales in India has risen to 40%, and he expects the same to cross the 50% mark before the end of this fiscal. Notably, the last five new car launches in the PV segment in India have been SUVs or compact SUVs. These include Maruti Suzuki Brezza, Maruti Suzuki Grand Vitara, Toyota Hyryder, and Mahindra Scorpio N.

SUVs, known to rule the rural markets in India, are also picking pace in metro cities. Gulati, who owns and operates Mahindra dealerships in Delhi and Allahabad, notes, 'This is the first time I have seen more bookings for ScorpioN in Delhi than in Allahabad. We are receiving similar trends from a majority of dealers.'

Sengupta is of the view that there may be some short-term correction as the backlog clears. He said, “Long-term forecasts are bullish. Basic factors like low per capita penetration, disposable income growth, and infra growth will ensure over 8% growth.”

Caution Ahead

While everything looks like a happy story in progress at the moment, car makers will have to be cautious as the supply-chain problems have not been completely resolved yet. The waiting period for some cars like the Mahindra XUV 700, Maruti Suzuki Dzire Tour, and more is still North of six months. Additionally, the Russia-Ukraine war has left a dent in the improving supply-chain conditions in the automotive market of India.

The geopolitical conditions have become more threatening as the danger of the China-Taiwan war is hovering around. If the war happens, the same will affect not only the automobile industry but the entire electronics vertical, as most semiconductors are fabricated in Taiwan. It is worth noting here that a lot of Taiwan-based semiconductor companies have already said that they will not be able to operate efficiently if the war between Taiwan and China breaks out.

'Car-makers will have to make sure that they have enough supplies to keep manufacturing cars in the future if the supply chain gets hit due to the probable China-Taiwan war,' Said Gulati.

The cars of today have more software and electronic content in them than the cars of yesterday. So a snag in the semiconductor supply chain of OEMs would simply mean less manufacturing, resulting in waiting periods going higher than what they are today.

Share This Page