The automotive retail sales especially in the two-wheeler and passenger vehicle is expected to see a robust demand given the start of the festive season with the Navratra today, but there is a sense of cautious optimism.
“Dealers optimistic about the upcoming festive season. There were clearly see some positive indications witnessed during Onam and Ganesh Utsav, we saw YoY growth of almost 20% across segments. Everything is growing, the best part is that two-wheeler segments have also picked up pace. Walk-ins and bookings have increased significantly,” says Manish Singhania, President, FADA to Financial Express Online.
Aalesh Avlani, Founder & Director, Credit Wise Capital presents a similar view, “• The festive season traditionally drives robust two-wheeler sales, as many opt to purchase new ones during this auspicious time. I anticipate a double-digit industry growth, given FADA’s shift from cautious to outright optimism and the promising year-on-year sales numbers. Moreover, the rising demand for electric two-wheelers, owing to cost-efficiency and eco-friendliness, will further amplify overall two-wheeler demand during the festivities. I’m optimistic about strong demand from both rural and urban areas.”
On the other hand, the dealer fraternity is also seeing improved availability of vehicle models. Unlike a year ago, when the supply chain constraint had to waiting period of popular demanded models having a waiting period of 18-24 months.
Gulati says this has now come down to around 6 months, which is helping the dealers to better accumulate and stock vehicles as “nobody wants to miss on that festive demand. Steps are being taken to meet whatever the customer desires.”
If one looks at the demand trend witnessed last month, which saw the festival of Onam and Ganesh Utsav, there was a sense of optimism with the overall industry seeing almost 20 percent YoY growth.
Avlani says with the supply chain in a better position, OEMs are now offering better deals in terms of discounts, finance schemes and special offers even for entry- and mid-level two-wheelers.
Cautious optimism
It is no secret that the demand in the two-wheeler and passenger vehicle segment has been for quite some time being driven by new model launches in the mid-level and premium models. Thanks to customers now focusing on the present and demand for personal mobility.
Almost all automakers have a few or a couple of models wherein the waiting period is still around 6 months. The industry stakeholders believe that this could be due to the fact that OEMs may be trying to re-focus and strategise to manufacture models which require a “lesser number of semiconductors” and hence be able to produce more models, instead of committing more semiconductors on a single vehicle.
Singhania states that when it comes to Indian customers “Mahurat and auspicious days are very critical. If you are able to deliver the vehicles that they desire, the relationship goes a long way with the consumers.”
Avlani also believes that the rural market will drive demand for entry-level two-wheelers which had seen muted growth for a long time.
But there is also a sense of cautiousness for Singhania.
“We are not yet very convinced that OEMs are better prepared in terms of inventory management, because we see a lot of accumulation of passenger cars or two-wheelers with the dealers. I reemphasise that OEMs need to focus on manufacturing models that are being demanded in the market. The PV inventory of 63-65 days is still pretty high, if the festive demand goes well and dealers are able to liquidate the inventory it will be great. But if the inventory build-up continues to be at the same level post-festival then it could lead to a huge crisis in the auto industry. I think it is the right time for the OEMs to reconfigure, re-understand the kind of vehicles being required by the dealers, market, and customers, rather than just piling up inventory of entry-level models/variants at dealerships,” he concludes.
