August Auto Retail Sales: Dealers To Enter Festive Period With Lowest Seasonal Inventory

Vehicle registrations — a measure of sales at dealerships — declined 11% over the preceding month to 13.91 lakh units in August, according to data from 1,493 regional transport offices in 33 states and union territories. BloombergQuint collated the numbers from the website of the Ministry of Road Transport and Highways.

Retail sales, however, rose 14.9% over the year earlier when the economy had began reopening in phases after a nationwide lockdown to curb the pandemic’s first wave. Still, total registrations during the reported month are far from the pre-Covid levels.

Inventory Trends

Passenger car makers continue to add inventory — the gap between wholesales and retail sales — but key popular variants remained in short supply because of lack of availability of semiconductors. Several new launches and popular variants have a waiting period of six-nine months.

“With original equipment makers drastically cutting down production due to shortage of semiconductors and ABS; container shortage and high metal prices, customers for the first time may not get a vehicle of their choice and lucrative schemes this festive season,” the Federation of Automobile Dealers Associations of India said in a statement. “Ultra-frequent price increases also keeping entry level buyers at bay.”

Two-wheeler stock, on the other hand, remained high as a series of price hikes in the last one year and input cost pressures impacted sales. Demand for such vehicles, according to FADA, “continues to be a concern as entry-level customers shift their priority to saving”.

BloombergQuint’s conversation with auto dealers, too, highlighted the twin troubles ahead of the festive period that accounts for nearly three months of sales.

Most automakers depend on STMicroelectronics’ unit in Malaysia — a key market witnessing a fresh surge in coronavirus cases. It worsened the chip shortage that began in December last year when sale of laptops and mobile phones to televisions surged with people working remotely during the pandemic. Lack of semiconductors forced certain companies, including the nation’s largest carmaker Maruti Suzuki India Ltd., and Mahindra & Mahindra Ltd., to temporarily stall production, hurting their ability to make up for the lost sales during the crucial festival period.

Analysts’ estimates compiled by BloombergQuint also showed a month-on-month decline in factory-gate shipments of passenger cars in August.

Among peers, Tata Motors Ltd. had last month told BloombergQuint that it was able to stock dealers to meet demand during the festival season. The company said it was buying [supply-chain] inventories during the lockdown imposed to curb the second Covid-19 wave, which is giving respite now.

Passenger Cars

Passenger car retail sales slipped over the preceding month but rose year-on-year. Of all the carmakers tracked by BloombergQuint, Tata Motors and three others saw a month-on-month rise in retail sales, while the rest reported a decline. All companies witnessed a jump in registrations over the year ago.

Two-Wheelers

All major two-wheeler makers tracked by BloombergQuint saw a decline in retail sales over the previous month in August.

Tractors

All tractor companies witnessed a month-on-month decline in registrations on account of below-normal monsoon rains in the current year.

Commercial Vehicles

Demand for certain commercial vehicles such as buses returned as schools began re-opening. Dealers continue to exhaust the existing inventory in August.

Electric Vehicles

Even as demand picked up, sales are yet to reach the pre-Covid levels.

Electric scooters are witnessing a rise in demand, aided by rising fuel prices, incentives by certain states and competitive pricing against convention models.

Nearly 55,598 battery-powered motorcycles/scooters, according to the Vahan portal, have been sold in the first eight months of this year compared with 22,958 in the entire 2020.