Automotive sector

SIAM reports slowing growth in the automotive sector, but is that bad news?

Data released by the Society of Indian Automobile Manufacturers (SIAM) shows domestic sales across all segments at an all-time low. In March 2022, the industry recorded 2,79,501 passenger vehicle domestic sales. This figure was lower than the 2,90,939 passenger vehicles sold in the same month in 2021.

National sales: monthly

Sales of two-wheelers have also been hit hard compared to March 2022. Only 11,84,210 two-wheelers were sold in March this year, while the sale of 14,96,806 two-wheelers was recorded in March 2021 Sales of passenger and cargo three-wheelers saw a slight decline from 32,310 units in March 2021 to 32,088 units in 2022. Overall, the two-wheeler industry
“Overall, the industry experienced a (-)6% decline in FY22. All segments are facing supply-side challenges and the industry has yet to experienced a full recovery from the disruptions it has faced since early 2020. Passenger vehicles, commercial vehicles and three-wheelers grew from a weak industry base in 2020-21, but the segments of two-wheelers fell again by (-) 11% compared to the previous year. said Mr. Rajesh Menon, Managing Director of SIAM.

Comparison with previous years

Persistent challenges due to the pandemic, ever-increasing supply chain issues and semiconductor shortages are certainly to blame for the decline. However, rising commodity and precious metal prices have pushed entry-level automobiles and two-wheelers beyond the reach of the common man. Compared to April 2020, commodity costs are up at least 90% across the board. HR steel is up 91.6%, aluminum 136.7% and nickel 219.6%. Precious metals such as rhodium increased by 124.9% in March 2022, compared to prices in April 2020. Prices for palladium and platinum saw an increase of 22% and 38.2% respectively. The increase in freight costs induced by the Russian-Ukrainian war is also to some extent to blame.

Raw materials and precious metals

Mr. Kenichi Ayukawa, President of SIAM, said, “Despite some recovery from a weak base, sales of all four segments of the automotive industry are even below the level of 2018-19. While some segments like commercial vehicles and SUVs are seeing improved demand, mass segments like two-wheelers and small cars are facing serious affordability issues.
However, continued efforts to indigenize vehicles and components by industry may prove to be a silver lining during the current crisis. India achieved its highest two-wheeler exports at 4,44,300 units in FY21-22. Exports of passenger vehicles also increased from 4.04 lakh units in FY20-21 to 5.78 lakh units in FY21-22.

Export performance

Speaking of export performance, Mr. Kenichi Ayukawa said, “We are pleased to report that all four industry segments have increased their exports. In fact, two-wheelers achieved their highest ever exports. It is good to see that Indian products are gaining acceptance worldwide for their quality, cost and performance.