The heat wave and rain ruined the match
Scorching heat and unseasonal rains are causing problems for automobile companies. This year, the Nifty Auto Index has registered a 40% rise, much higher than the 16% gain of the Nifty 50. In such a situation, there was an expectation that there would be a surge in automobile retail sales, but untimely rains dashed this hope.
According to the market data for August, passenger vehicle sales in the domestic market declined for the second consecutive month. Market leader Maruti Suzuki saw an 8.4 percent drop in sales, the company sold only 1,43,075 units. Local sales of Hyundai fell by 8 percent to 49,525 units. Local car company Tata Motors also had to bear the brunt of the weather. Tata Motors managed to sell only 44,142 units in the market with a 3 percent drop. Understand from the article what factors caused the fall in the automotive market.
Monthly sales trend
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May-June: The heatwave in May-June kept customers away from showrooms, resulting in a decline in vehicle sales in the market.
July: With the July rains, the automotive market’s growth has taken off again.
August: According to IMD data, India recorded 16% more rainfall than normal in the month of August. While the rains created flood-like situations in some areas, there were also many areas where crops dried up awaiting the rains. There is a possibility that this trend of arbitrary weather may continue in September. Vinkesh Gulati, former president of the Automobile Dealers Federation of India, attributes the poor sales in the auto industry to weather-related factors.
2. Impact on private vehicle sales
Motorcycles and scooters: Be it short-distance travel or long solo trips, motorcycles and scooters are often the first choice for most Indians. This year (January-August 2024) saw a 12% year-on-year increase in two-wheeler sales. The market surge is a sign of good private final consumption returns and pent-up demand. However, there is also an economic reason behind the sale of two-wheelers.
Cars: After two very strong years, the car market recorded modest year-on-year growth of 4% due to a high base effect.
There was a surge in two-wheeler sales at the beginning of the year, but due to the heatwave in May and June, sales of cars and two-wheelers started moving like an elephant. Sales picked up again in July, but again the market started to decline due to flooding in many areas.
2. Commercial vehicle
In India, tractors and trucks are used primarily for commercial purposes. This is a huge market. Despite this, there has been a huge decline in sales of both vehicles in the last three months.
Trucks: Truck sales declined due to a slowdown in truck manufacturing and the long election period, but the heat wave and heavy rains dealt a double blow to construction and agricultural transport, causing the market to decline.
Tractors: Two factors explain the decline in tractor sales. The high base effect and severe weather conditions affecting farmers between June and August 2023 also significantly slowed tractor sales.
3. Passenger vehicle
Three-wheelers, taxis and buses – these vehicles form the backbone of India’s public road transport system. While there was a decline in all sectors of the automotive industry, passenger vehicles maintained their sales stable. Very little or no decline was seen in three-wheelers, taxis and buses. The demand for three-wheelers and taxis is at its peak. At the same time, the movement of people has increased after the Corona period, the effect of which is directly visible in the rising demand for buses.
The automotive sector is recovering
Climate change is having a serious impact on developing countries, as was already clear from this year’s market. The market needs to not only prepare for future situations, but also focus on all factors to stop the decline and increase sales. However, despite the adverse weather conditions, there are clear chances for business to recover. This possibility is seen above all in two-wheelers and passenger vehicles. The latest figures also indicate improved sales of consumer goods. In addition, the upcoming festive months will also influence the growth of the automotive sector.
