The month of August presented a nuanced scenario for the Indian automotive sector, with sales figures reflecting a blend of growth and stagnation. The Federation of Automobile Dealers Associations (FADA) reported total retail sales of 19.64 lakh units, demonstrating a 2.84% increase compared to the previous year, yet showing minimal change on a month-on-month basis. This stability was largely due to the recently announced GST cuts, a consequence of the Prime Minister’s declaration on August 15th from the Red Fort, which prompted potential buyers to delay their purchases in anticipation of price reductions.
Consequently, August witnessed a surge in inquiries and bookings, but a slowdown in actual sales transactions. Customers were waiting for the implementation of new GST rates from August 22nd. Although customer interest was high, many were hesitant to complete their purchases. A significant number of buyers preferred to defer until the GST 2.0 implementation on September 22nd, which affected sales in all segments. However, a recovery in sales is expected from September.
Passenger vehicle sales, encompassing cars and SUVs, reached 3,23,256 units in August. While this was a 0.93% increase year-on-year, there was a 1.63% decrease month-on-month. Initial positive effects from Onam and Ganesh Chaturthi were noted, though customer purchases slowed down as the month progressed due to the GST changes. Moreover, heavy rainfall and urban flooding impacted showroom attendance. C.S. Vigneshwar, the Chairman of FADA, believes that the upcoming festive season, starting at the end of September, will positively influence sales. With interest rates falling and improved GST clarity, passenger vehicle sales are projected to rise.
Two-wheeler sales in August totaled 13,73,675 units, increasing by 2.18% year-on-year and 1.34% month-on-month. Demand was high, but sales were affected by heavy rainfall in several states. Scooter sales were strong, while purchases of commuter motorcycles were postponed. Dealers recorded more bookings for September-October, suggesting an accumulation of demand.
FADA suggests that the subdued August demand is not lost, but postponed. Factors such as the stable GDP, lower inflation, and favorable monsoon suggest a strong demand during the upcoming festival period. September will be split into two periods; the initial period during the Shradh will be slow, but post September 22nd, with the convergence of GST 2.0 and Navratri, the sales are expected to increase across passenger vehicles, two-wheelers, CVs, and three-wheelers due to latent demand.