Overcoming challenges and the way forward for the Indian automobile sector

In this episode of the State of The Economy podcast, Ronendra Singh interviews Manish Raj Singhania, the President of the Federation of Automobile Dealers Associations (FADA), to discuss the challenges and the future of the Indian automobile industry.Despite a slight decline compared to pre-COVID levels, the auto retail sales in May showed positive year-on-year growth across all vehicle categories, except for two-wheelers and commercial vehicles.Manish Raj Singhania, President of the Federation of Automobile Dealers Associations (FADA) highlights several challenges faced by dealerships, including inventory management, liquidity and financing, transition to electric vehicles, and the need for digital transformation. The absence of a dedicated auto dealer protection act in India is also discussed, along with the importance of dealership models in the country. The impact of online sales on traditional dealer networks is explored, and online sales are still minimal in India due to the personal nature of purchasing vehicles. The rural market's slow recovery is identified as a major factor affecting two-wheeler sales, and the need for government support, such as reducing GST on two-wheelers, is stressed to make them more affordable. Good monsoon seasons and stable agricultural income are seen as essential for rural market recovery. The podcast concludes by addressing the potential influence of electric scooters on two-wheeler sales, noting a modest increase in May.