August presented a mixed bag for the Indian auto industry in terms of sales. The Federation of Automobile Dealers Associations (FADA) recorded a total retail sale of 19.64 lakh units, marking a 2.84% year-on-year increase, but exhibiting relative stability month-on-month. This stability was attributed to the recent GST cuts, which were announced by Prime Minister Narendra Modi from the Red Fort on August 15th. Following the announcement, consumers began to postpone purchases in anticipation of reduced prices.
The result was a surge in inquiries and bookings during August, yet a slowdown in actual sales. Customers were awaiting the implementation of the new GST rates, which took effect from August 22nd. According to FADA, while inquiries were positive, customers were hesitant to finalize purchases. Many buyers preferred to wait until the GST 2.0 implementation on September 22nd, causing stagnation across all segments. However, an improvement in sales is anticipated from September onwards.
Passenger vehicle sales, including cars and SUVs, reached 3,23,256 units in August, reflecting a 0.93% year-on-year rise, but a 1.63% month-on-month decline. Deliveries saw an early boost from Onam and Ganesh Chaturthi celebrations, but in the latter half of the month, consumers postponed their purchases to benefit from the GST changes. Heavy rainfall and urban flooding also reduced showroom foot traffic. FADA Chairman C.S. Vigneshwar believes that the festive season, beginning at the end of September, will provide a boost. With decreasing interest rates and increasing transparency in GST, passenger vehicle sales are expected to accelerate.
Two-wheeler sales in August stood at 13,73,675 units, marking a 2.18% year-on-year increase and a 1.34% month-on-month rise. Inquiries were promising, but heavy rainfall in several states slowed down rural purchases. Scooter sales remained strong, while commuter motorcycle purchases were postponed. Dealers recorded increased bookings for September-October, indicating a gradual build-up of demand.
FADA believes that the demand lost in August is not gone, but rather deferred. With a stable GDP of 6.3-6.8%, low inflation, and a favorable monsoon, all signs point toward robust demand during the festive season. September will be divided into two parts. The first part will be quiet during the Shradh period, but after September 22nd, when GST 2.0 and Navratri coincide, there is an expectation of a significant increase in sales across passenger vehicles, two-wheelers, CVs, and three-wheelers due to pent-up demand.
