The automotive industry is poised for an intriguing August, marked by a blend of opportunities and challenges including an uptick in the two-wheeler (2W) segment, anticipation of the festive season, the aftermath of a good monsoon and pent-up demand would set the stage for potential growth.

“Across the board, there are common positive indicators echoing hope. The 2W sector expects an uptick, driven by upcoming festivals, a harmonious supply-demand equilibrium and the roll-out of new models. The three-wheeler (3W) category, too, is witnessing a surge in interest, particularly towards electric variants,” Manish Raj Singhania, President, Federation of Automobile Dealers Associations (FADA), said on Monday.

Similarly, the passenger vehicle (PV) segment is likely to benefit from the festive euphoria and new product introductions coupled with high demand in SUV category, he said, adding that commercial vehicle (CV) would also have a pent-up demand.

Cause for concern

“However, challenges loom on the horizon. The 2W segment’s entry-level category continues to be a cause for concern. In the CV space, there are apprehensions regarding streamlined loan disbursements for buyers. Inventory level in PV has breached 50-day mark in anticipation of the upcoming festival season and the slowdown in entry-level car remains,” Singhania said, while sharing the monthly retails sales numbers.

A larger concern is the IMD’s projection of a below-average rainfall in August, potentially leading to lower crop yields. This could impact the purchasing power, especially in rural regions. “While the industry has experienced a tepid trend over the past two months, FADA remains watchful in the short term,” he added.

PV sales

According to FADA’s monthly retail sales data, the PV sales grew 4 per cent year on year to 2,84,064 units in July, as against 2,73,055 units in the corresponding month last year.

The 2W retail sales also grew 8.15 per cent year on year to 12,28,139 units (11,35,566 units) during the month.

Similarly, CV sales grew 2 per cent year on year to 73,065 units (71,619 units) last month. The 3W retail sales grew the most at 74.35 per cent year on year to 94,148 units (54,000 units) in July.

In total, the industry sold 17,70,181 units (16,09,217 units) across all segments during the month, a jump of 10 per cent year on year, the FADA data showed.