BQ Dealer Survey: High Base, Weak Consumer Sentiment Hurt Auto Sales

That’s also partly because buyers had advanced purchases to Dhanteras, considered auspicious for buying, in October, the survey of nine large dealerships revealed. Retail auto sales, measured by vehicle registrations, clocked a 4 percent year-on-year growth in October, according to data released by the Federation of Automobile Dealers Associations.

Cars and two-wheelers snapped their worst streak of decline in decades to register a growth in October as deep discounts during the festive season lured buyers to showrooms. That, however, doesn’t point to a sustained recovery from the prolonged slowdown.

“Last November, the sales were higher on account of Dhanteras and Diwali... Hence, we are likely to see a year-on-year drop in sales,” Nikunj Sanghi, managing director at JS Fourwheel Motors Pvt. Ltd., told BloombergQuint. “There has been a moderation in demand as walk-ins and enquiries have also seen a drop mainly because of the extremely weak consumer sentiment.”

Still auto sales in November were a little better than what was anticipated at the start of the month because of the ongoing wedding season, according to Vinkesh Gulati, director at United Automobiles. “There has been some comfort to sales from the marriage season. Among different categories, two-wheeler sales have been better than passenger vehicle sales, aided by a favorable monsoon.”

Gulati said within two-wheelers, motorcycles fared better than scooters and new launches (like S-Presso from Maruti Suzuki India Ltd.) managed to do well. The demand, he said, was also aided by only a partial and not a complete rollback of discounts.

While inventory across categories has more or less normalised on account of robust sales and production cuts, dealers are still nervous over the demand outlook. There has been a healthy inventory correction across the system post strong festive sales, a dealer said on the condition of anonymity. Dealers, he said, are operating with limited stock and outlook for the near term remains cautious due to the year-end when buyers defer purchases to the new year and transition to the stricter Bharat Stage VI emission standards.

That’s expected to reflect in factory-gate sales.

Wholesales Likely To Fall

Wholesales, or factory dispatches, are expected to fall in November, according to BloombergQuint’s poll of four brokerages.

Here are the factors, according to Nomura, that could impact wholesale volumes for individual automakers:

Ashok Leyland

• Weak demand and inventory de-stocking pre BS VI to keep wholesales subdued.

Bajaj Auto

• Domestic wholesales to decline on weak retail sales; Export of two-wheelers to sustain growth.

Eicher Motors – Royal Enfield

• Lower priced variants, new stores to support volumes.

Hero MotoCorp

• Wholesales to remain slow on weak retail sales.

Maruti

• Inventory build-up post good festive retails, to benefit wholesales.
• Newly launched S-Presso to support volumes.

M&M

• Weak demand and high competition to impact utility vehicles, tractors to remain subdued.

Tata Motors

• Weak demand due to overall slowdown, high competition and inventory de-stocking before BS VI to keep wholesales subdued.

TVS Motors

• Weak retail sales to impact wholesales.