ACR In auto blog

Is the Indian auto industry on the path to recovery?

Despite several months of severe sales shortages, the Indian automotive sector showed positive signs of recovery in August 2020. This recent spike in vehicle sales represents a step in the right direction for the industry, which had struggled to overcome the impacts of the ongoing pandemic. Because of India’s nationwide lockdown, customers were prevented from visiting automotive dealerships, a factor that proved to be a detriment to total sales numbers.

The industry’s sales uptick came to the surprise of dozens of automotive experts, many of whom did not anticipate the sector to rebound so quickly.

“The Indian auto sector’s rate of recovery has been better than expected,” said Vinkesh Gulati, President of the Federation of Automobile Dealers Associations (FADA).

Shedding more light on recent industry trends, Gulati mentioned that overall sales of passenger vehicles in August 2020 were only 7% lower than August 2019 totals. The auto industry’s post-lockdown rate of recovery has surpassed industry experts’ and players’ expectations.

Other key highlights:

  • Maruti Suzuki reported a 32% growth in domestic sales. The manufacturer sold 152,608 vehicles during September 2020, compared to 115,452 units one year ago.
  • MG Motor’s new vehicle launches provide much-needed momentum and improved products to manufacturers.
  • Manufacturers are ramping up production to meet consumer demands in the upcoming festive seasons.
  • The rural market is playing a key role in the improvement of the sales figures in the automotive industry.

“States like Bihar, Delhi, Himachal Pradesh, and Jharkhand witnessed a significant spike in passenger vehicle sales in August,” added Gulati. “However, the major reason for the improved sales figures in these rural markets has been due to liquidity of the funds due to bountiful monsoon and hence, the demand for the new automobiles has been robust. The trend is likely to continue during the upcoming festive season. Coupled with lucrative deals and flexible payment, funding options during the festive season is expected to fuel the auto sector’s revival.”

However, the pandemic’s impacts on the Indian economy cannot be overlooked. As the automotive industry continues to climb itself out of the hole caused by the pandemic, expect other industries to follow suit.

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