In August 2023, the Indian automotive industry exhibited resilience with car sales showing strong growth momentum. The overall sales volume across India reached 1.8186 million vehicles, a year-on-year increase of 9%. Various sub-markets also experienced growth, signaling promising trends for the Indian automotive industry.

Thanks to a wider range of vehicle options and huge demand from urban and rural areas, the Indian two-wheeler sector demonstrated a 6% growth in August. The three-wheeler sector saw a remarkable increase of 66%, and notably, one out of every two three-wheelers sold was an electric vehicle, indicating the popularity of electric mobility in India.

The growth in India’s passenger vehicle market is also noteworthy, with a year-on-year increase of 6.5%. Maruti Suzuki and Mahindra, two car manufacturers, performed well. Maruti recorded robust retail sales of 133,546 units, a YoY increase of 14.52%, primarily driven by strong demand for its SUV models. Although Hyundai witnessed a slight increase in sales, with 47,072 units sold in August 2023, its market share slightly declined from 15.68% to 14.94%. However, the company plans to introduce new products and powertrain options to improve its market share. Mahindra showed an impressive sales growth rate of 30%, capturing a market share of 9.83%. Although Kia India experienced a sales decline of 10.24%, Toyota Kirloskar Motor saw a slight increase in market share, selling 17,186 units.

Despite these growths, Indian car manufacturers still face some challenges. Supply chain bottlenecks persist, especially in terms of timely deliveries. Moreover, customer discount expectations and the Shraadh period may have some impact on the market due to limited availability of products in popular sub-segments like mid-size SUVs.

The Federation of Automobile Dealers Associations (FADA) remains cautiously optimistic about future growth in the Indian automotive industry. With the onset of Onam, the festive season is set to begin, which will boost market sentiment, improve liquidity, and address supply chain bottlenecks. However, inadequate rainfall may impact demand in rural areas, particularly for the two-wheeler sector. The commercial vehicle sector is expected to experience growth in September during the construction peak and bulk transactions, but the real sales momentum may manifest during Navratri and Deepawali after the Shraadh period.

Besides, India’s consumer demand in rural areas is showing positive signs of recovery, but this recovery is dependent on the performance of the monsoon season in its final stage. A rise in inflation due to inadequate rainfall would lead to a decline in consumer spending, thereby having a negative impact on demand. This would also pose challenges for agricultural output and subsequent planting seasons, particularly during periods of increased traditional consumer activities in India, such as Navratri and Deepawali.

Overall, the Indian automotive industry achieved encouraging growth in August 2023, but caution remains necessary. With the arrival of the festive season, market sentiment is expected to improve, but factors across various sub-markets are still subject to change. Supply chain issues and meteorological factors may pose challenges for future growth. Therefore, Indian car manufacturers need to continue to remain vigilant in order to address potential uncertainties.