After almost zero sales in April, the two-wheeler (2W) and passenger-vehicle (PV) segments see resurgence of inquiries, amid the overall low consumer sentiment, said analysts tracking the industry. Based on interactions with channel partners, analysts said, wholesales continued to decline in May due to lockdown, absence of non-discretionary demand, supply chain constraints. An analyst with Motilal Oswal said, “Based on our interaction with leading industry channel partners it has been seen that 2W/PV segments are seeing resurgence in inquiries (50% of normal at operational dealerships). On the other hand, CVs are seeing negligible demand (from construction sector only). Overall consumer sentiment is low and customers are cautious with spending given the uncertain environment. Prabhudas Lilladher analyst said there were healthy inquiries as well footfalls for PV and 2W after lockdown eased in rural/Tier-II/Tier-III towns.
The market analyst said discussions with leading channel partners and experts had revealed that there would be a recovery in rural and Tier-II/Tier-III belts. Both 2W and PV segments witnessed higher inquires for entry-level segments (30-35% recovery in inquiries across the segments), led by pent up demand and increased preference for personal mobility and lower cancellation rates for pre-lockdown bookings (5-10%).
According to Motilal Oswal analyst, the demand for 2Ws is returning, and will be been driven by preference for personal vehicles rather than the public transport, and higher disposable income in rural market due to good harvest. While this could be an initial spurt in demand, sustenance of the same is a key monitorable.
For the PV segment, after the gradual lifting of lockdowns, sales have recovered slightly, largely due to conversion of pre-lockdown bookings. MSIL is in a comparatively better position than peers due to its entry-level portfolio. The Motilal Oswal analyst said CV segment was the hardest hit due to low economic activities. “Our channel checks suggest that MHCVs have seen marginal demand only from the construction segment and are not expected to recover before the festive season. This is due to BS-IV pre-buying in 4QFY20, price hike of 16-18% on BS-VI (12-13% cost inflation + 3-5% due to discount withdrawal), depressed fleet utilisation, and stringent financing norms.”
The Prabhudas Lilladher analyst observed that the demand was expected to normalise by the end of H1, led by strong rural sentiments, festive season and stabilised income situation of individuals/institutions, and added, “We continue to believe that OEMs with controlled inventory, having a large rural presence (rural to lead recovery followed by semi-urban and urban) and small to mid-range products (with decline in purchasing power, customers will tend to move towards lower end segment) are likely to recover faster.”
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