Car sales fail to light up: Little festive cheer for automakers

Analysts state that the season hasn’t been disappointing, though there are no big positive surprises either. The current demand and low inventory sentiment in passenger vehicle and tractor segment suggest that wholesale numbers would be quite higher in the months to come. Here are some more details!

By:December 9, 2020 10:13 AM
Car registrations vehicle sales

 

It hasn’t been much of a festive season for automakers with registrations declining nearly 20% year-on-year (y-o-y) in November, dragged down by a steep 21.4% drop in sales of two-wheelers and a 31% fall in sales of commercial vehicles (CVs). As Rajiv Bajaj, MD, Bajaj Auto, had observed recently, the trends in demand were not too encouraging and it was going to be a bit of a challenge for the industry. Indeed, sales of passenger vehicles (PVs) increased by just 4.17% y-o-y in November despite a helpful base effect; wholesale volumes went up 9% y-o-y. Nonetheless, the segment is doing better than others whether the volumes remain at much below pre-Covid levels. Maruti Suzuki India chairman RC Bhargava had recently told a leading television channel he was expecting retail sales in December to be reasonably good. Bhargava added that dealerships were getting orders and that the rate of enquiries has sustained even after the festive season. He expects 2021 to be much better than 2020.

Tarun Garg, director (sales, marketing & service), Hyundai Motor India said the recently introduced all-new i20 has helped carry forward the festive momentum even in the post-Diwali period for the company. The festive season accounts for about a third of total annual sales. Data from Federation of Automobile Dealers Associations (Fada) reveal registrations fell 4.74% during the 42-day festive period. This is worrying because the 2019 festive season, too, was very dull.

Analysts point out, the season hasn’t been disappointing, though there are no big positive surprises either. “The current demand and low inventory sentiment in passenger vehicles and tractors suggests that wholesale numbers would be higher in the coming months. On the flip side, however, manufacturers of two-wheelers and CVs are expected to maintain a cautious stance with no major inventory push,” analysts at Motilal Oswal wrote in a recent note. The subdued sales of CVs, often considered a proxy for the health of the economy, remain a concern. “The demand for the bus segment remains muted as most schools continue to remain closed and a large number of offices still encourage work-from-home practice,” analysts at CARE Ratings wrote.

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