Festive Season Stocking, Easing Supply Chain Likely Aided Auto Sales In August 2020
Segment leaders, like Maruti Suzuki and Hero MotoCorp, are seen likely to continue outperforming the industry in August 2020.
Automobile wholesales rose in August as supply constraints caused by the pandemic eased and companies pushed stocks to dealers anticipating an improvement in demand ahead of the festive season, according to three brokerages.
Factory-gate shipments for most automakers rose in the range of 11-31% month-on-month in August, showed data compiled from the research reports of Nomura, Motilal Oswal and Emkay Global. On a year-on-year basis, while sales of tractors and passenger cars rose, most two-wheelers and commercial vehicles saw a decline.
Wholesale volumes of passenger vehicles, according to analysts, surpassed two-wheelers mainly on account of a low base last year. Commercial vehicle sales continue to remain under pressure on a year-on year basis but improved sequentially.
India’s automakers were reeling under the worst slowdown in decades even before the virus hit. The world’s strictest lockdown, effective March 25, hammered production and demand at dealerships. After a washout in April, auto sales revived in subsequent months as the nation eased the stay-at-home restrictions.
Retail Sales
Dealers and analysts echoed the optimism for retail sales.
“August brings with it the beginning of a long festival season, starting with Onam and Ganesh Chaturthi,” said Ashish Kale, president at Federation of Automobile Dealers Associations. “The auto industry will start its recovery journey in a linear manner.”
According to Kapil Singh, research analyst at Nomura, retail sales of passenger vehicles have largely come back to pre-covid levels, albeit on a low base. “Two-wheeler retail sales, however, are still at about 80% levels. We maintain that segment leaders like Maruti Suzuki and Hero MotoCorp are likely to continue outperforming the industry.”