Double-digit growth in 2Ws, uptick in PV sales in November but OEMs optimistically cautious

The Indian economy is showing some early signs of recovery, be it in the form of reduction in GDP contraction from -23.9 percent in Q1 of the ongoing fiscal year to -7.5 percent in the Q2, or the uptick in sales of passenger vehicles and two-wheelers.

The month of November saw total passenger vehicle sales to be pegged at 264,898 units (November 2019: 253,139 / +4.65%) with the two-wheeler segment showing an uptick of 13.43 percent to register 1,600,379 units (1,410,939) in totality. While three-wheelers, at 23,626 units (55,778 / -57.64%) continue to be on the declining trend owing to decreased demand for shared mobility during the pandemic, the Society of Indian Automobile Manufacturers (SIAM) did not issue wholesale data for the commercial vehicle sector for last month as well. Clearly, the CV sector continues to be badly hit and the numbers will bring down overall growth at India Auto Inc.

PVs on the upswing
With people becoming increasingly aware of the need for personal safety while commuting with their families in the ongoing pandemic time, passenger vehicles are showing an uptick in sales across all sub-categories. Of the total PVs sold last month, a total of 149,949 passenger cars were sold (154,223 / -2.77%), while vans registered sales of 11,424 units (10,555 / +8.23%). On the other hand, utility vehicles (UVs), which are riding w wave of surging and continued demand, were the ones clinching the maximum growth and recorded sales of 103,525 units (88,361 / +17.16%).

Now, if one compares the aforementioned wholesale despatches from factories to those produced on the assembly lines of carmakers, there is a near 1:1 equation with the total PV production numbers also showing an uptick of 12.68 percent at 317,740 units (281,979). This clearly implies that OEMs have been able to overcome supply chain challenges to some extent and move towards attaining regular production levels, which could further lead to a good inventory build-up at retailers and trigger lucrative discount schemes in the month of December.

But, according to Nikunj Sanghi, veteran automotive dealer and MD, JS4Wheel Motor, “Discounts will depend largely upon the kind of inventory build-up at dealers and given that festive season discounting was up to 25 percent lower compared to previous years, I feel that year-end discounts will stand lower as well.”

Scooters get into growth mode like motorcycles
A look at the two-wheeler segment’s performance shows that even though this class of vehicles is getting relatively more impacted by the work-from-home regime, negating the real need for individual mobility on the ground, the segment is still going strong especially with robust demand coming in from the rural markets.

As a result, motorcycle sales rallied to notch 1,026,705 units last month (893,538 / +14.90%), whereas scooters which form the primary tool of mobility in urban cities went home to 502,561 buyers (459,851 / +9.29%). The scooter segment, for which a good number of sales emanate from urban India, is finally seeing growth after months of either negative or flat sales. Mopeds, on the other hand, another mode of self-reliance and multi-tasking in the rural areas recorded nearly 23 percent uptick in their sales which reached 70,750 units (57,550) in the month.

Cumulative April-November numbers still red
Even as the sales numbers for the month of November, which also included the popular festival of Diwali, are in the optimistic territory, the performance of the industry over the April-November period still brings caution about the road ahead.

Total vehicle sales across the three segments stand at 11,201,904 units (15,176,317 / -26.19%), with PVs registering a de-growth of 21.67 percent, selling 1,455,558 units (1,858,180). In the two-wheeler segment, numbers are down 25 percent registering a cumulative total of 9,637,871 units (12,863,757 units).

In a recent interview toAutocar Professional, YS Guleria, director, Sales, Marketing, Aftersales, Logistics, Premium Bikes, Brand and Communication, Honda Motorcycle and Scooter India, said, “It is very difficult to predict what is going to happen and also whether the economy has returned to the path of sustained growth or not, and if vehicle sales have moved beyond the initial pent-up demand. We are in the fourth week after the festive season and the inquiries are already down in double digits.”

“We cannot say that we are out of the woods just as yet because there are several other factors that we need to be cautious about. There is the risk of another wave of Covid-19 infections, especially after marriages being allowed to take place in December’s wedding season. Furthermore, there is uncertainty about high retail inflation which is on the upward trend, as well as the recent development on the Farm Bill, which has put a spoke in the wheel as far as North India is concerned, especially states such as Punjab, Haryana (bordering Punjab) and North West Rajasthan,” he added.

Meanwhile, what could be a disturbing global supply chain issue and impact OEM production operations at India Auto Inc, Bosch Ltd has said that it has been impacted by “severe supply shortage for Imported micro-processors (semiconductors), leading to reduced ability to deliver to the automotive market demand in India. Restoration of normalcy in global supply situation for imported components and impacts are being very closely assessed and addressed on top priority.”