FY22 car sales up 13%; high cost hits demand for two-wheelers

Car sales, buoyed by the need for personal mobility choices, climbed despite output disruptions caused by chip shortage, reflecting sustained demand through a period that coincided with the lowest interest rates on record in the country.

As many as 3,069,499 passenger vehicles were sold in the local market in the last financial year, as against 2,711,457 units reported in the year-ago period, shows data available with industry body Society of Indian Automobile Manufacturers (SIAM).

While strong demand for utility vehicles helped passenger vehicle makers improve volumes over the lows seen during the peak of the Covid-19 pandemic, the industry is yet to touch its peak sales of 3.38 million units recorded in FY19. With sales of 1,489,178 units, utility vehicles raced ahead of passenger cars that recorded wholesale volumes of 1,467,056 units last fiscal year.

Sales of commercial vehicles in the period under review rose 26% to 716,566 units. Wholesale volumes of three-wheelers increased 18.9% to 260,995 units. Despite the improvement seen in commercial vehicle and three-wheeler sales, volumes in these segments were the lowest in five and six years, respectively. The comparisons exclude data for the Covid-hit FY21.

Meanwhile, two-wheeler sales continued to remain under pressure, especially at the entry-level motorcycle segment, due to the sharp rise in acquisition costs after the transition to BS VI emission norms and the economic impact of the second wave of the pandemic in rural markets. Two-wheeler sales fell 10.9% to 13,466,412 units last fiscal – the lowest volumes recorded in the last 10 years.

“Despite some recovery from a low base, the sales of all four segments are below even 2018-19 levels. While some segments like commercial vehicles and SUVs are seeing improvement in demand, the mass segments like two-wheelers and smaller cars are facing serious affordability issues. Of course, our immediate challenge in most segments is semiconductor availability,” said Kenichi Ayukawa, President, SIAM. Automobile sales across segments declined around 6% to 17,513,596 units in FY22.

Rajesh Menon, Director General, SIAM concurred: “All segments are facing supply side challenges and the industry is yet to see complete recovery following the disruptions it has been facing since early 2020. Passenger vehicles, commercial vehicles and three-wheelers have witnessed a growth compared to a low base of the industry in 2020-21, but the two-wheeler segments further declined by (-) 11% from the previous year.”