What auto sales tell us about weak demand in India

Eighteen months into the pandemic, there is a definite sense of recovery in the Indian economy. But the long-drawn recovery is also beset with a legacy problem: lacklustre demand. A look at broadly disaggregated data on sales of automobiles in India tells us how.

At the wholesale level, twowheeler sales are ten steps behind passenger vehicles in terms of recovery to the January 2018 level. In other words, if 100 two-wheelers and 100 passenger vehicles were sold in January 2018, only 83 and 93, respectively, were sold in July 2021.

Notice the gap between the two. The recovery to the 2018 peak has been slower for twowheelers than passenger cars.

At the retail level, sales of cars are back to January 2018 levels in

August 2021. Two-wheeler retail sales, on the other hand, are 22% lower, nearly four years down the line. Trailing 12-month averages have been used in both cases. A faster pickup in wholesale car sales shows us that the relatively low-income households — urban factory workers, construction labourers, people in the rural workforce — have been affected more than the salaried or business class.