India's Auto Industry Sees Remarkable Growth: August Retail Sales Surge by 9% to 1.81 Million Vehicles

The latest data from industry sources and market research firms reveals that the August performance is a testament to the sector's recovery from the setbacks brought about by the COVID-19 pandemic and the subsequent supply chain disruptions.

India's automotive industry continues to defy expectations as it records a remarkable 9% growth in retail sales for the month of August, with a total of 1.81 million vehicles hitting the roads. This surge in demand spans across all segments of the industry, showcasing the resilience and adaptability of India Auto Inc. in the face of economic challenges and changing consumer preferences.

The latest data from industry sources and market research firms reveals that the August performance is a testament to the sector's recovery from the setbacks brought about by the COVID-19 pandemic and the subsequent supply chain disruptions. Notably, this upswing in retail sales is not limited to any particular category of vehicles but is widespread across the spectrum.

The Federation of Automobile Dealers Associations of India (FADA) has announced retail sales figures for August 2023. The total sales of 18,18,647 units in the two- and three-wheeler, passenger and commercial vehicle, and tractor categories represent a year-on-year rise of 8.63% (August 2022: 16,74,162 units). The monthly growth rate is 2.74% (July 2023: 17,70,181 units).

According to the data released (see the FADA data table above), all five vehicle segments and their sub-segments other than LCVs have grown: two-wheelers (up 6.29%) and three-wheelers (up 66.15%), passenger vehicles (up 6.53%), tractors (up 13.58%), and commercial vehicles (up 3.23%).

However, four vehicle sectors other than three-wheelers have shown a month-on-month fall over June 2023 retails. Two-wheeler retails are down 6% in July 2023 compared to June 2023, three-wheelers are down 9%, PVs are down 4%, tractors are down 8%, and CVs are down 0.20 per cent.

YoY growth was recorded across many segments, with 2W at 6%, 3W at 66%, PV at 6.5%, Trac at 14%, and CV at 3%. All segments grew throughout the month, with the exception of tractors, which fell 19%. When compared to pre-COVID standards, the auto retail industry improved by 0.8%, led by 2Ws regaining lost territory and moderating de-growth by 11%.

Notably, 3W sales reached a new high in August, reaching 99,907 units, a 66% YoY increase and a 6% MoM rise, surpassing the previous high of 94,148 units set in July 2023.

Also Read: Auto sales in June grow by 10%, first-half sales by 53% of CY2023

Despite obstacles such as slow cargo movement, verticals like as cement, iron ore, and coal saw healthy demand in the CV sector. As the holiday season approaches, data point to a market recovery, bolstered by priority supply planning and a rebound in travel-related sales. This upbeat outlook is strengthened by aggressive promotional tactics and improved client sentiment.

Commercial vehicles, the backbone of the logistics and transport sector, displayed an impressive rise in sales. The demand for trucks and light commercial vehicles (LCVs) has been driven by the resurgence of economic activities, e-commerce, and the need for efficient freight transportation. This segment's recovery is seen as a positive sign for the overall health of the Indian economy.

Three wheeler sales

The three-wheeler sector is growing the fastest, owing to the increasing demand for electric models for both passenger and cargo transportation. The overall sales of aug2023 is 99,907 unit, the industry's highest monthly figures yet, surpassing July's 94,148 units and increasing by 66% over August 2022's 60,132 units.

Month on month, August 2023 sales are up 6.12% from July 2023, which surpassed the previous high of 86,857 units set in March 2023. The new standard has now been set for August 2023.

While the FADA president emphasizes the importance of "addressing issues like OEM support and dealer engagement," the fact is that this segment is expected to record a new high for the calendar year and fiscal year.

The persistent demand for electric three-wheelers in the face of high petrol, diesel, and CNG costs is generating a new charge. EVs (49,269 units) contributed to 49% of the total 99,907 units sold in August, increasing by 60% year on year (August 2022: 30,720).

The electric vehicle market share of the whole three-wheeler market is now 49%, which implies that every second three-wheeler sold in India is an electric model. The electric three-wheeler market is still growing by double digits, owing to strong demand for passenger transportation as well as last-mile operators for e-commerce, food deliveries, and other applications.

A short glance at the company's performance reveals that Bajaj Auto's hold on this segment has grown even stronger. Bajaj's market share has climbed to 33.60% from 30.82% in August 2022, thanks to sales of 33,581 units, an increase of 81% year on year (August 2022: 18,531 units).

Piaggio Vehicles sold 7,541 units in August, giving it a 7.50% share, and Mahindra Last Mile Mobility followed with 6,162 units and a 6.20% share.

Also Read: Strong Growth: FADA Reports 2.02% Rise in Commercial Vehicle Sales for July 2023

Electric Vehicles

The electric vehicle (EV) market also continued to gain traction. As the government incentivizes EV adoption and the charging infrastructure improves, more Indian consumers are opting for electric alternatives. Companies like Tata Motors, Mahindra Electric, and Ola Electric have been actively expanding their EV portfolios, catering to the increasing demand for sustainable mobility solutions.

Analysts predict that the upcoming festive season, which traditionally witnesses a spike in vehicle purchases, will further bolster the industry's recovery. However, challenges such as rising fuel prices, inflation, and global economic uncertainties remain on the horizon, necessitating a continued focus on innovation, cost management, and sustainable practices within the Indian automotive sector.

In conclusion, India Auto Inc's August retail sales surge of 9% to 1.81 million vehicles is a remarkable achievement for an industry that has faced its fair share of challenges in recent years.

With growth seen across all segments, the Indian automotive industry appears to be on a path of sustained recovery and expansion, reaffirming its position as a key driver of the country's economic growth.