Auto Sales In September 2020 Point To Inventory Build-Up Before Festive Season
Inventory built up at dealerships in September even as retail auto sales rose for the fourth straight month on improving demand amid easing stay-at-home restrictions.
Factory-gate shipments of cars, two-wheelers, commercial vehicles and tractors were higher than retail sales last month as automakers pushed stocks anticipating higher demand ahead of the festive season. That led to an inventory build-up at dealerships. The trend was corroborated by BloombergQuint’s compilation of estimates of three brokerages.
Automakers’ optimism stems from the nation—fighting the worst economic downturn in decades—opening up most activities in an effort to revive sentiment and growth. Recovery during the festive season is crucial for the industry that was battling a slowdown even before the pandemic, which completely stalled production and led to a washout initially. While sales picked up from June, companies operating at low capacity kept inventory at dealers in check.
Vehicle registrations—a measure of sales at dealerships—rose 14.5% month-on-month but fell 9.8% over the year-ago period to 13.51 lakh units in September, according to data compiled by BloombergQuint from the website of the Ministry of Road Transport and Highways.
Passenger Cars Vs Two-Wheelers
While retail registrations for some carmakers have reached close to levels seen in March 2020, that of two-wheelers are still lagging. To be sure, car sales remained muted in the first three months of 2020 as companies cut production amid the already slowing demand and dealers rushed to pare the BS-IV inventory ahead of the April 1 deadline. In contrast, two-wheeler sales remained elevated.
Here’s a look at auto sales in each segment in September 2020:
Retail sales of passenger cars rose 9.8% month-on-month and 9.5% over the year-ago in September. That came on the back of a low base last year and entry of companies like Kia Motors and MG Motors into the Indian car market.
Among the passenger carmakers tracked by BloombergQuint, Maruti Suzuki India Ltd. continued to outperform peers, with sales of the nation’s largest carmaker rising both month-on-month and over the year-ago period.
Retail registrations for two-wheelers rose 14.3% over August but declined 12.5% over September last year.
Tractor registrations rose after a month’s blip, aided by higher rural spend and a normal monsoon. Retail sales for the segment rose 2.2% month-on-month and 80% over the year ago.
Commercial vehicle sales rose over the previous month as industrial activity picked up the pace but remained under pressure compared to September 2019 levels. Retail sales for the segment rose 54.3% month-on-month but declined 31.6% over the year earlier.