-1 C
London
Wednesday, February 8, 2023

Mixed demand trends for cars in November as festive boost wears off but signs of recovery visible in rural areas

Must read

Biden thanks congressional leaders, Nancy Pelosi in State of the Union address

IE 11 is not supported. For an optimal experience, please visit our site on a different browser.Biden: 'The climate crisis doesn't matter if...

Biden to Address Child Safety Online at State of the Union • londonbusinessblog.com

President Joe Biden will address the nation in the second State of the Union address of his term on Tuesday night. By a...

Global VC firm Partech reaches first slot of largest African fund at €245 million • londonbusinessblog.com

To get a roundup of londonbusinessblog.com's biggest and most important stories delivered to your inbox every day at 3PM PST, register here. How are you,...

Steven Roy- Wiki, age, height, net worth, wife, ethnicity

Stephen Roy is a Canadian filmmaker and actor. Steven directed and appeared in a number of well-known films. He has appeared in...
Shreya Christinahttps://londonbusinessblog.com
Shreya has been with londonbusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider londonbusinessblog.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

  • Indian auto companies are looking at mixed demand momentum after feeling upbeat in October following the festive seasonal boost.
  • Due to the festive boost last month, registrations in the passenger car (PV), commercial vehicle (CV) and tractor segments increased by 35-66% compared to October 2019.
  • However, PV sales are off to a slow start in November wedding season, despite an increase in discounts.
  • Two-wheeler registrations are also still below pre-Covid levels, but urban markets are boosting demand for scooters and premium motorcycles, analysts say.

Indian auto companies are looking at mixed demand momentum after feeling upbeat in October following the festive seasonal boost. Retail data suggests trends remain mixed in segments such as two-wheelers, passenger cars and commercial vehicles.

The celebratory boost in October increased registrations in the passenger car (PV), commercial vehicle (CV) and tractor segments in the range of 35-66% compared to October 2019, according to a report from Jefferies.

While the wedding season has now begun, a report from Yes Securities states that passenger cars are off to a slow start in November, despite an increase in discounts compared to October.

Commercial vehicles are also seeing an increase in corporate inventories, the report said, adding: “Large fleet operators have staggered their delivery schedules, while the contribution of private customers has yet to gain momentum.”

Two-wheeler registrations still below pre-Covid level

Two-wheeler registrations are still below pre-Covid levels, with Hero MotoCorp and TVS Motors expected to report a sequential drop in sales of 14.2-17.9%, according to Yes Securities.

In October, a report from Elara Securities said that Hero MotoCorp reported a 17% drop in its total sales, while Bajaj Auto reported a 10% drop. The lone winner was TVS Motors, which reported a 1.5% year-over-year increase.

Total retail two-wheeler sales could fall 5-8% in November compared to October, according to Yes Securities. On a year-over-year basis, however, it notes that growth could be flat to high-single digits.

“Compared to the past few months, demand for 2W has seen some rebound during this holiday season. However, registrations were still far from pre-pandemic levels in 2019,” said Nikunj Sanghi, former president of the Federation of Automobile Dealers Associations of India (FADA).

Wedding season is off to a slow start, SUVs are relatively outperforming

The Yes Securities report notes that the trend of entry-level cars struggling has continued through November. In addition, hatchbacks are also seeing slow customer adoption.

Sports Utility Vehicles (SUVs), on the other hand, are in relatively higher demand. However, companies still face supply chain issues, which hamper their overall sales.

“PVs continue to face delivery challenges in premium variants impacting the overall store-level model mix,” the report said.

Higher discounts on entry-level cars as inventory increases

Automakers are now offering higher discounts on entry-level cars as they try to reduce inventory builds, which have now increased to more than 15 days, according to the Yes Securities report.

For example, Maruti Suzuki has increased discounts in the range of ₹5,000-10,000 while Tata Motors offers up to ₹10,000-15,000 more discounts in November compared to October.

In general, Maruti Suzuki, Tata Motors and Mahindra & Mahindra offer discounts and benefits in the range of ₹28,000-65,000 depending on the car being purchased.

Signs of recovery visible in the countryside

According to analysts at Motilal Oswal, rural India, a critical market especially for manufacturers of two-wheelers and tractors, is showing signs of recovery.

“Recovery in rural areas resulted in healthy growth of 26% and 30% year-over-year respectively in 2W and tractor retail during the holiday season, even as secondary 2W dealers (mainly non-urban) saw a strong rebound in demand,” said the research office.

The company noted that despite the rebound in demand during the holiday season, “full normalcy has yet to be achieved”. It added that urban markets continue to see better demand than rural markets, reflected in the growth of the scooter and premium motorcycle segments.

For example, Royal Enfield’s Hunter 350, a premium motorcycle, saw waiting time increase from 1 month to 2.5-3 months, while dealer confidence increased significantly.

“Channel partners we have spoken to are very confident following the launch of Hunter as their volumes are ~15% lower than FY18 levels, but are back at FY19 levels,” said the Yes Securities report.

Tight cash flows and slower take-up lead to truck stock build-up

Commercial vehicles such as trucks continue to witness an inventory build-up, with the northern belt’s main market witnessing underutilization, according to Yes Securities.

Making matters worse and adding to the uncertainty is the ban on construction activities in the Delhi-NCR region and the closure of schools due to pollution. This has affected demand for both buses and trucks, analysts say.

According to Yes Securities, tighter cash flows due to an increase in working capital needs, customers have postponed delivery schedules of booked vehicles, contributing to the build-up of inventories.

$TVSMOTOR.NSEDaily:👉 It is one of the best performing stocks in the auto space as it is almost All Time High and has been on a consistent upward trend.👉 It has recently already tested 1000 Big Round Number as support. 👉 Any bullish bounce near 1000-1010 is the least likely to get on the bullish train.

— (@Tradingmonks) November 29, 2022

ALSO SEE:

Indian automakers are driving the festive boom, two-wheelers are showing signs of an upswing

One Year After Market Debut, Paytm Performs Worst Among Recent Major IPOs – Cartrade, Policybazaar, and LIC Join the Party

India VIX cooling to pre-Covid levels – here’s why and where it’s heading

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article

Biden thanks congressional leaders, Nancy Pelosi in State of the Union address

IE 11 is not supported. For an optimal experience, please visit our site on a different browser.Biden: 'The climate crisis doesn't matter if...

Biden to Address Child Safety Online at State of the Union • londonbusinessblog.com

President Joe Biden will address the nation in the second State of the Union address of his term on Tuesday night. By a...

Global VC firm Partech reaches first slot of largest African fund at €245 million • londonbusinessblog.com

To get a roundup of londonbusinessblog.com's biggest and most important stories delivered to your inbox every day at 3PM PST, register here. How are you,...

Steven Roy- Wiki, age, height, net worth, wife, ethnicity

Stephen Roy is a Canadian filmmaker and actor. Steven directed and appeared in a number of well-known films. He has appeared in...

Aussie fintech Yondr tackles inflation pains and hidden costs

As inflation and interest rates continue to rise, digital banking alternative Yondr is stepping up to help Australians save on hidden costs and budget...

Contents