December Auto Retail Sales: Two-Wheeler Inventory Remains High, Tractor Demand Rebounds
Two-wheeler inventory remained elevated as sales at dealerships in December declined after two months.
Retail sales, measured by vehicle registrations, of two-wheelers fell about 20% over the preceding month, according to data on the Vahan portal of the Ministry of Road Transport and Highways.
Demand failed to sustain the festive-period bump-up amid rising costs. Yet, companies continued to push stock, BloombergQuint’s dealer checks had revealed. That caused the level of inventory—measured as the difference between retail sales and factory-gate shipments—to remain high, in spite of a decline in November and December.
Average inventory for two-wheelers, according to the Federation of Automobile Dealers Associations, ranged from 30–32 days at the end of December.
Two-wheeler makers’ business was on a decline before Covid-19 struck as longer-tenure upfront insurance and stricter emission standards increased the cost of ownership. Then the pandemic hurt purchasing power. Sales picked up on preference for personal mobility as restrictions eased, but rising fuel costs and price hikes tempered the nascent recovery. Besides, consumers have started opting for cheaper, low-range electric scooters.
Carmakers also pushed stock as demand for personal mobility continues to rise and chip shortage eases in December. Average inventory for passenger vehicles, FADA said, ranged from 8–10 days at the end of December 2021.
Passenger vehicles saw muted growth in registrations in December, while tractor sales jumped as sentiment improved ahead of winter crop sowing. Still, total registrations declined 14.2% over the previous month and 16% over December 2020 at 15.65 lakh units.
Overall retail sales stayed below the pre-pandemic level of March 2020. Passenger cars, however, beat pre-Covid levels for the sixth straight month.
“The month of December is usually seen as a high sales month where OEMs (original equipment makers) continue to offer best discounts to clear the inventory due to change of year. It was, however, not the case this time around as retail sales continued to disappoint, thus wrapping up an underperforming calendar year,” Vinkesh Gulati, president at FADA, was quoted as saying in a statement.
Here’s how each segment fared in December 2021…
Of the passenger vehicle makers tracked by BloombergQuint, retail sales rose for the top four over the previous month in December. But year-on-year, Maruti Suzuki India Ltd. and Hyundai Motor India Ltd. reported a decline. Tata Motors Ltd. is the only automaker among the top four to see a rise in registrations.
All major two-wheeler makers, barring Royal Enfield, witnessed a decline over the previous month in December. Year-on-year, too, registrations dropped. Retail sales of two-wheeler makers are yet to cross the pre-pandemic level.
Tractor sales rebounded in December over the preceding month, but declined on a yearly basis.
Commercial vehicle makers such as Ashok Leyland Ltd. and VE Commercial Vehicles Ltd. saw a year-on-year rise in retail sales on a lower base. Registrations, however, declined over the previous month for major companies. Retail sales in the quarter ended December, too, rose year-on-year for most.
Electric vehicle sales exceeded 3 lakh in 2021 for the first time as fuel cost rose. Sales for battery-powered vehicles crossed 50,000 units in December alone.