The festive season has given a fillip to the entry-level two-wheeler and passenger vehicles. Initial registrations indicate around 10 percent gains in registration rates compared to the same period this year. Though these segments have been source of concern as regulations and material cost pushed OEMs to pass on some price hike. However, it is now expected that consumer sentiment and acceptance of price hike, especially in the entry-level segment, is finally normalising.
“Overall, the Navratra season has been good across the country. Last year the festive demand was at record high and even if we are able to cross or register decent growth over last year, we will see a new record. The two-wheeler segment has performed really well during the festive and is expected to clock double-digit growth. The stocks (of two-wheelers) are also not that high, so dealers continue to stock inventory to meet customer demand,” says Manish Raj Singhania, President, Federation of Automobile Dealers Association.
In fact, according to Jefferries, a leading financial institution, the Indian two-wheeler industry is witnessing an acceleration in volume growth in the initial phase of the ongoing month-long festive season (Oct 15 to Nov 15). The Registrations in the first 10 days of festive (15-Oct to 24-Oct) are up 20% versus the like-to-like period in 2022 (Sep 26 to Oct 5). The two-wheeler registrations also have grown 9% in H1 FY2024 and a stronger start to festive bodes well for the long-overdue recovery in the segment.
But the real challenge for entry-level two-wheeler sales is to be able to see growth for the next 4-5 months to be truly said that demand has revived.
Inventory woes
The passenger vehicle segment has been firing on all cylinders, thanks to strong growth from the SUVs on the back of multiple launches and shifting consumer preference. The demand for feature-rich and premium variants continues to see significant waiting period.
On the other hand, the passenger vehicle dealers are also under pressure on the back of inventory pile-up for certain slow-moving models and variants that could potentially hamper profitability of dealers.
“Demand for SUVs continues to be very high. The waiting period is only in the SUV segment, but for other segments the cars are stocked and available with dealers. We were expecting some robust supply from OEMs during the festival time, but they have not been upto the mark. On the other hand, passenger car dealers are already at a high level of paid-up stock level. It is very critical to offload theses stocks during festival times otherwise the crisis may deepen,” cautions Singhania.
In a recent analyst call R C Bhargava, Chairman, Maruti Suzuki India had stated that the “Indian car market cannot sustain growth without demand boost for entry-level cars.”
While the outlook for India auto retails is in the positive, there is caution towards slowing down of sales in the coming quarters.
