Auto industry output in FY22 slips to levels seen 5 years ago

Automobile production in India fell 6% in the justended financial year (FY22), shrinking total industry volumes to levels seen five years ago as higher product prices and rising ownership costs forced potential small car and two-wheelers customers to defer purchases.

The decline was led by a 11% drop in two-wheeler production to 13.46 million units during FY22, showed data issued on Wednesday by industry body Society of Indian Automobile Manufacturers (Siam).

The two-wheeler industry last clocked such low levels a decade ago in FY12, when sales were just over 13.4 million units. At its peak in FY19, two-wheeler production in India was over 21 million units. While sales of passenger vehicles, commercial vehicles and three-wheelers climbed in FY22 on a yearly basis, data revealed that actual production levels across segments have dragged the auto industry back several years. Three-wheeler volumes at 261,000 returned to 2003-04 levels, while commercial vehicles (717,000 units in FY22) and passenger cars (3.06 million units in FY22) were both back to 2017-18 levels.

“There has been no growth in the auto industry in the last five years. The overall market is at the same level as the last five years, especially with regard to customers at the lower end of the segment. Buyers of mass-segment vehicles such as small cars and two-wheelers are facing serious affordability issues as these vehicles have gone beyond their reach. All stakeholders have to think and put concerted effort to bring back growth in the auto industry,” Kenichi Ayukawa, president, Siam said. Several automakers have outlined price hikes this quarter, which are likely to make products even more unaffordable.

The auto sector has been contending with a number of challenges since the outbreak of the pandemic.