Auto sales reflect economic divide; most Indians shut out from growth story, says Congress

Flagging reported drop in the share of passenger cars in the overall auto sales, the Congress on Wednesday claimed that it points to a state of the economy where most Indians are locked out of the consumption economy, there is growing inequality, stagnant incomes and weak investment. Congress general secretary in-charge communications Jairam Ramesh shared a media report which claimed that while the middle class is increasingly unable to transition from two-wheelers to entry-level cars, the sport utility vehicle (SUV) segment is recording a rising share of first-time buyers.

There was no immediate response from the government or the BJP on the claims.

"India Inc is raising the siren once again - this time for auto sales. In 2018-19, passenger cars made up 65% of total sales of vehicles - that share is now only 31%. SUVs and multi-purpose vehicles now account for 65% of sales," Ramesh said in a post on X.




Noting that car sales have long been considered an indicator of the economy's health, Ramesh said the last few years have seen a 'decoupling' of the two with medium GDP growth been accompanied by concerningly low growth in car sales.

"Buyers are increasingly turning towards the used car market. Auto manufacturers are now producing with an eye on export markets rather than domestic markets," he claimed on X.

"What does this say about the state of the economy? Most Indians are locked out of the consumption economy - about 88% of Indian households earn less than Rs 12 lakh annually," Ramesh said.

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Flagging the issue of "growing inequality", Ramesh said the surging sales of expensive SUVs compared to the stagnant sales of passenger cars points to the elite gaining a disproportionate share of the economy's growth.

He alleged that there was "pernicious inequality" with most lower and middle-income consumers stuck in their current income segments and are unable to rise out of them.

Flagging the issue of stagnant incomes, Ramesh said the auto sales figures also reflect that the lower and middle classes are seeing their incomes stagnating amidst medium to high inflation.

He further claimed that it also showed weak investment.

"Weak consumption in the domestic economy means manufacturers have no incentive to set up new factories or create new capacity for domestic markets," Ramesh said.