Muted Demand To Weigh On January Auto Sales
Auto sales are expected to remain tepid in January due to muted demand and weak consumer sentiment, according to BloombergQuint poll of three brokerages.
Sales of two-wheelers and commercial vehicles are likely to hit a speed bump, the poll showed, indicating higher inventory levels at dealerships have led to slower wholesales volumes, adding to the woes of auto companies.
While there has been a notable decline in inventories especially in passenger vehicles, the two-wheeler segment inventory remains high, said Deep Shah, research analyst at Motilal Oswal said.
Nomura expects passenger vehicle sales in January to decline by 5 percent on a year-on-year basis. The Japanese brokerage firm expects a 4 percent decline in two-wheeler sales and a 7 percent drop in medium and heavy commercial vehicle sales for the same period.
New launches like Wagon R, Tata Harrier and Nissan Kicks in January can benefit wholesales, said Nomura’s auto analyst Kapil Singh, adding that a weaker demand in the medium and heavy commercial vehicle segment should lead to volume decline sustaining.
The tractor demand, according to a Motilal Oswal note on Jan. 29, has been weakening in key agriculture states of Maharashtra, Madhya Pradesh and Rajasthan.
Here are the key factors according to Nomura that will impact automakers:
Medium and heavy commercial vehicles sales are expected to fall 16 percent year-on-year.
Decline in three-wheeler sales growth will impact overall growth numbers.
Royal Enfield sales are expected to fall 10 percent to year-ago level on weak demand.
Weak retail sales and high inventory to lead to slower wholesales.
Lower inventory and new launches to benefit wholesales. However, exports will continue to decline.
Mahindra & Mahindra
Utility vehicle demand to remain weak despite Marazzo launch. Tractor growth trajectory to slow down as well on weak retail demand.
Medium and heavy commercial vehicle sales growth to slow down on weak demand. Passenger vehicle sales expected to fall in double digits on the back of a higher base last year.
Healthy momentum to continue across segments especially export markets.