Car, bike sales set to grow in December 2020, here’s why

What’s interesting is that both PV and two-wheeler firms are offering smaller discounts this time around. Typically, auto companies offer big discounts in December to clear the calendar year inventory because of thin demand for them in the new year.

By:Updated: Dec 30, 2020 10:48 AM
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Wholesale desptaches of passenger vehicles (PVs) and two-wheelers are expected to grow by 5.4% and 14.4% y-o-y, respectively, in December — the fifth straight month of growth. Analysts point out much of this comes on the back of pent-up demand, festive sales and also a low base. While wholesale numbers will come in on January 1, Motilal Oswal estimates demand in December has been good and that the inventory is lower than normal for PVs. What’s interesting is that both PV and two-wheeler firms are offering smaller discounts this time around. Typically, auto companies offer big discounts in December to clear the calendar year inventory because of thin demand for them in the new year.

One reason for the lower discounts and still better sales during the month could be that most companies have announced price hikes from January to compensate for the rise in input costs. Since dealer inventory is low, largely because of the year-end manufacturers did not push stocks, wholesales should be good in the January-March quarter as well. “Our interactions with leading industry channel partners reflects optimism. Two-wheeler inventory currently stands at 30-45 days, PVs inventory while entering the last week of December remains at minimal levels (10-20 days) with a waiting period of 4-6 weeks in fast selling models,” the brokerage wrote.

Commentary from companies has been mixed. While Maruti Suzuki has maintained that though the pent-up demand was slowly petering out, sales would be fine till December, others like Mahindra and Mahindra have expressed optimism that since economic activity is showing signs of picking up, the demand momentum could remain intact in the coming months.

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