The automotive retail sales clocked double-digit sales this festive season and it is no secret that the passenger vehicle segment is on track to post a record year primarily on the back of new SUV launches. Even in the premium two-wheeler space (above 150cc) the demand has been robust. But the entry-level segment is still under pressure and there are some pockets that continue to see a muted performance with high inventory levels.
“The festive season in Kerala is in August and September. The season was muted when compared to last year. Last year the industry volume during the festive period in Kerala was around 45,000 units versus 39,500 this year. The industry was down by 12% over last year’s festive months,” explained John K Paul, Director, Popular Vehicles & Services, a Cochin-based veteran dealer.
Similarly, Andhra Pradesh was the only state to report a decline in motorcycle sales YoY. The state reported a degrowth of 6.52 percent.
Paul says that the demand at the “entry-level (read passenger and two-wheeler) has got impacted due to price increase on account of input cost and regulatory norms. The interest cost combined with higher fuel prices also impacted sentiment in this segment. Inflation is snuffing out the disposable income of consumers.”
The situation in the western part of the country is more encouraging. Nashik-based dealer, Samkit Shah, Director, Jitendra Group says, “The retail sales have been very good, and it would have been much more if the supply was able to meet the demand. I believe good monsoon, positive sentiments, new model launches, and availability of finance were the major driving force behind passenger vehicle sales.”
But there is a similar view on the entry-level segment, Shah too agrees that it has “not received good response”.
In terms of customer preference and trend, in the passenger vehicle space, customers are opting for higher-end models, SUVs, and automatic variants. There is a huge mismatch between demand and supply, which is expected to hopefully resolve in the coming quarters.
In terms of inventory, while Shah says it is at a healthy level of 15-20 days in the western region but Paul adds the “inventory is high at 40 days since the dealers are carrying over 2 months stock of entry-level models,” in select southern markets.
