January auto sales signal a smooth start to 2024
The year has kicked off well for India’s automobile industry. All major categories except one posted double-digit year-on-year growth. Retail sales of two-wheelers grew 15% in January, according to data from the Federation of Automobile Dealers Associations.
Offtake of three-wheelers rose 37% and of tractors, 21%. Retail sales of passenger vehicles (PVs) climbed 13% to a record 393,250 units. Commercial vehicle sales, however, were flat.
Growing automobile sales bode well for India’s manufacturing sector and send a broadly positive signal on demand in the economy. In the case of PVs, demand was led by sports utility vehicles, which have been finding increasing favour. The odd part, though, is how small cars that were once the PV market’s mainstay have trailed off in recent years, which suggests a drop in upgradation from two-wheelers.
And now a climb in overall inventory levels may require further recalibration of what’s rolling off auto assembly lines. As economic conditions improve, as forecast, commercial vehicles and small-car sales could show an uptick. India’s adoption of electric vehicles (EVs) must accelerate, too, with higher-priced vehicles leading the charge, ideally.
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