Indian Auto Industry Posts Another Year Of Degrowth While Exports Touch New Heights

Another year of misery for the Indian auto industry continues as the sales slumped by 5.94% in FY22, YoY to 17,513,596 units.

The saving grace this time around was the exports that grew by a healthy 36% in FY22 compared to last fiscal year. A total of 5,617,246 units were exported in FY22, a report by SIAM stated.

In terms of monthly sales, the picture continues as March 22 saw sales of 1,495,848 units which is 17.8% less than what the industry saw in the same month a year ago. However, the exports in the month grew to 451,058 units to translate to a growth of 3% YoY.

Kenichi Ayukawa, President, SIAM, said, “The year gone by was full of unforeseen challenges and new learning for the industry.”

“Indian auto industry has worked hard against these challenges to keep the value chain running, to indigenise parts, control cost, invest in new technologies, and enhance exports. The Government also came out with targeted support like PLI schemes, FAME scheme extension, etc,” he noted.

Elaborating on the sales performance, he mentioned that despite some recovery from a low base, sales of all four segments of the auto industry are below even the 2018-19 level. While some segments like commercial vehicles (CVs) and SUVs are seeing improvement in demand, the mass segments like two-wheelers and smaller cars face serious affordability issues.

Ayukawa added that the entry-level segment, both in terms of PVs and 2Ws, is taking a major blow at this stage. However, the overall industry stands at a place where it was five years ago.

Further, the continuing electronic component shortage issue added to high commodity prices and the geopolitical situation will lead to a continuation in the challenging times.

“Ofcourse, our immediate challenge in most segments is semiconductor availability,” he added.

Talking about export performance, Ayukawa further said, “We are happy to share that all four segments of the industry have increased their exports. Infact, two-wheelers achieved their highest ever exports.”

He noted that in line with the Make In India project, the Indian products are well received by the global markets due to their quality and lower cost.

“It is good to see that Indian products are becoming more acceptable worldwide for their quality, cost and performance,” he said.

Rajesh Menon, Director General, SIAM, said, “Overall industry witnessed a de-growth of 6% in FY22. All segments face 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.”

Menon further added that factors like increasing raw material and precious metal costs and the ever-growing freight cost, both inbound and outbound, are putting much pressure on the supply chain and the exports and are a severe challenge for the Indian auto industry stage.

Passenger Vehicles

In March 2022, the PV segment saw sales of 279,501 units, a marginal drop of 3.9% over March last year. Meanwhile, the exports for the segment grew by a whopping 52% on a YoY basis in the month to 61,270 units.

Notably, except for the utility vehicle segment, which grew by 7.9% YoY in March 2022, retailing 132,032 units, every other segment saw a sales downfall.

The passenger car segment fell by 12% YoY to 138,031 units, while the van segment posted a negative growth of 18.6% YoY to 9,438 units in March 2022.

However, the export excluding the van segment, which de-grew by -88.65%, YoY, saw a growth of 56% and 49% YoY in the passenger cars and the utility vehicle segment, respectively in March 22.

In FY22, the overall segment posted a healthy growth of 13.2% YoY to 3,069,499 units. Except for the passenger car segment, which de-grew by 4.85% compared to FY21 to 1,467,056 units, every other segment grew substantially.

Utility vehicles, for example, posted a growth of 40.3% YoY to 1,489,178 units in FY22, which is slightly higher than the passenger car segment. Furthermore, the vans segment also posted growth of 4.06% YoY, to 113,265 units in the financial year.

Exports, however though, grew in all the sub-segment. The passenger car segment saw exports of 374,986 units in FY22, translating to a growth of 42% compared to FY21. While exports for the utility vehicle segment grew by 46%,YoY to 201,036 units and vans by 12% YoY to 1,853 units. The exports for the overall segment saw a rise of 43% compared to FY21, with exports of 577,875 units in FY22.

Two-wheelers

The 2W segment has had the worst hit of all time, and the story continues. In March 22, the overall segment fell by 20.88% YoY to 1,184,210 units. 

The scooter sub-segment saw retailing 360,082 units in the month, a de-growth of 21.4%, YoY, while the motorcycle and mopeds sub-segment fell by 20.8% and 15.7%, YoY, respectively, in March 22 to 786,479 units and 37,649 units respectively.

The exports for the segment weren’t much promising for the segment too. Expect for the motorcycle sub-segment that saw a marginal growth of 0.62% YoY with 329,399 units exported in March 22, both the scooter and the mopeds sub-segment fell by 22% and 100% YoY, respectively.

A total of 21,842 units of scooters were exported in March 22, while no mopeds were shipped during the month. As a result, the overall segment saw a negative growth of 1% YoY in exports.

Annual data suggest the same picture as the overall segment plummeted by 10.9% YoY in FY22 to close the year with sales of 13,466,412 units. Menon noted that the 2W segment has gone behind by at least ten years.

A total of 4,009,076 units of scooters and 8,984,186 units of motorcycles were sold in FY22, translating to a de-growth of 10.5% and 10.3%, YoY respectively. However, the moped segment posted a growth of 23.3% YoY to close the year with sales of 473,150 units.

Interestingly, the exports for the 2W segment grew by 35% YoY in FY22, with a total of 4,443,018 units exported in the fiscal. The scooter, motorcycle and the moped sub-segment also grew by 51%, 34% and 23% YoY in FY22, with exports of 350,330 units, 4,082,442 units and 10,246 units, respectively.

Three-wheelers

Unlike the other two segments, the 3W segment witnessed growth in March 22 by 0.68% YoY to 32,088 units in the month. The passenger carrier sub-segment saw sales of 23,011 units, 5.6% up from March 21. However, the goods carrier sub-segment spiralled down by 13.8% YoY to 9,077 units in the month.

In terms of exports, the segment was not so lucky as the other two, as it posted a de-growth of 3% YoY with exports of 38,535 units in March 22. The passenger carrier sub-segment went down by a marginal 1%, YoY, while the goods carrier sub-segment went down by 68% in March 22.

However, the annual picture of the segment shares a happy moment as it posts a growth of almost 19% YoY to close the year with sales of 260,995 units. The passenger carrier sub-segment saw retail of 183,607 units, increasing by 35.5% YoY. However, the goods carrier sub-segment fell by almost 8% YoY to close the financial year with sales of 77,388 units.

While in exports, the overall segment saw growth by 27% YoY to 499,730 units in FY22. The passenger carrier and the goods carrier sub-segment grew by 26% and 82% YoY, respectively, to close the year with exports of 489,535 units and 10,195 units, respectively.

Commercial Vehicles

As per the SIAM data, the demand for CVs has gone up as it posts growth of 26% YoY to 716,566 units in FY22.

The M&HCV sub-segment grew by almost 50% YoY to 240,577 units in FY22. Under this, the demand for the passenger carrier segment grew by 61.2%, YoY, while the demand for goods carrier grew by 49.1%, YoY.

The demand for LCVs has also picked up as it grew by 16.7% YoY to close the year, retailing 475,989 units. The passenger carrier LCVs’ retail went up by 65%, YoY, while the LCVs in the goods carrier segment saw sales rise by 15.2%, YoY.

In terms of exports, the overall segment grew by a notable 83% YoY, with exports of 92,297 units in FY22. The M&HCV sub-segment witnessed a growth of 83% YoY to 32,181 units, while the LCV sub-segment also grew by 83% YoY, shipping 60,116 units in FY22.