Festive season 2020: Two-wheelers zip past PVs in October wholesale despatches

Analysts opined that wholesales would be higher than retails due to inventory refilling for anticipated festive demand. Siam, on its part, said that October wholesale numbers have been good on account of dealers preparing to serve demand for the upcoming Diwali festival,which is in November this year.

By:November 12, 2020 9:49 AM
Citing a pick-up in sales of some auto segments like passenger vehicles and two-wheelers in August, he said the sector was already on a revival path.

In a boost to the preparations for Diwali festival sales, the wholesale despatches by automakers to the dealers in October saw a significant growth, drawing on from the previous months and marking improvements across certain segments. The domestic sale of passenger vehicles went up by 14.19% and that of two-wheelers grew by 16.88%, compared to October last year. Three-wheelers saw a slight improvement in sales, compared to the last month, however, it still registered de-growth of 60.91%, over the corresponding month of last year, showed the data by Society of Indian Automobile Manufacturers (Siam). The total production of passenger vehicles, three-wheelers, two-wheelers and Quadricycle in October 2020 marked growth of 35.64% as against October 2019 levels. However, the retail sales did not make pace with the October despatches by the OEMs. The retail auto sales data, released by the Federation of Automobile Dealers Associations (Fada) on Monday, however, had painted a gloomy picture.

The Fada data for October revealed that vehicle registrations continue to fall by 24% year-on-year. The two-wheeler segment de-grew by 26.82%, three-wheeler by 64.50%, CV by 30.32% and PV by 8.80%. Fada said that with only Navratri in October this year as compared to both Navratri and Diwali in same month last year, October registrations did not show positive growth. Even though customer walk-in’s have improved, healthy conversions are yet to see light of the day and the dealer inventory for both 2W and PV are at its newest highs in this financial year. Fada asked the OEMs to assess the on-ground inventory level and curb production accordingly.

Analysts opined that wholesales would be higher than retails due to inventory refilling for anticipated festive demand. Siam, on its part, said that October wholesale numbers have been good on account of dealers preparing to serve demand for the upcoming Diwali festival, which is in November this year. Care Ratings said the domestic wholesales of automobiles for October 2020 show an impressive growth as OEMs sharply raised their production and factory despatches in anticipation of a high consumer demand in the ongoing festive and wedding season. On a year-on-year basis, two-wheelers and passenger vehicles continue their positive growth momentum, while, three-wheelers are still far from showing any recovery as it declined 60.9%, but commercial vehicles are now nearly at same levels as last year.

Tarun Garg, director — sales, marketing & service, Hyundai Motor India, said October sales performance has set a positive tone for overall business environment and Hyundai will continue to strongly contribute towards sustainable growth of economy, community and all its stakeholders. Jefferies, in analysis, said passenger vehicle (PV) industry is on a strong footing with registrations in tracked states rising 17% year-on-year in the first three weeks of the month-long festive period (which started on October 17 in 2020 versus September 29 in 2019). Two-wheelers (2Ws) are also improving sequentially but registrations were still down 15% year-on-year in the first three weeks of festive season. Registration data can see some upward revisions with a delay but 2Ws are lagging PVs in the recovery. As per the dealer association, entry-level motorcycles witnessed lean demand in October.

Naveen Soni, SVP — sales & service, Toyota Kirloskar Motor, said:“ October has been our best month so far since March 2020. The festive season has proved to be bullish as we witness demand surging, month-on-month. This has been true of our retails too as order flow has been smooth, from the very beginning.” According to Motilal Oswal analysis, the wholesales would be higher than retails due to inventory refilling for anticipated festive demand. Leading industry channel partners reflect optimism for an overall good festive season for automobile retail despite the slow start. Current two-wheeler (2W) inventory at 40-60 days is in line with expected demand for the remaining festive season. The private vehicle (PV) inventory is also at comfortable level of 25-35 days.

Rakesh Sidana, director — sales, MG Motor India, said, “We expect continued traction because of Diwali in November and are ramping up supplies to cater to the increasing demand.” Dealers are optimistic of good sales during November on the back of inquiries being at par with last year, improved cash-flow to farmers, sales to customers who are holding off purchases in expectation of discounts, and completion of election in Bihar and MP (by-elections), said Motilal Oswal.

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