Slow Start To Festive Season To Impact Auto Sales In October
A slow start to the festive season, higher upfront insurance costs and fuel prices are likely to slow down auto sales in October, according to a BloombergQuint poll of analysts.
“Our dealer checks indicate that the start to the festive season has been slow, especially for passenger vehicles and two-wheelers, as sentiment has been affected due to higher fuel prices, interest rates and insurance costs,” said Nomura Auto Analyst Kapil Singh in his monthly estimate note.
The Japanese brokerage expects the sales of passenger vehicles and two-wheelers sales to grow by 4 percent and 11 percent, respectively, in October.
Motilal Oswal, too, expects a slow start to auto sales and said that southern markets like Kerala are witnessing a gradual recovery after the floods which will add numbers to the monthly auto sales. “Dealer checks indicates only a marginal improvement in demand momentum, leading to high inventory levels,” said Jinesh Gandhi, research analyst at the brokerage.
Motilal Oswal said that a lower base will lead to higher growth in the commercial vehicle segment but liquidity pressures from customers and fleet operators, in addition to purchases being deferred due to vehicle financing costs, has hurt demand.
Here are the key factors according to Nomura that will impact individual automakers:
- Growth trajectory seen strong on the back of higher medium and heavy commercial vehicles sales.
- Growth to be driven by higher three-wheeler and domestic motorcycle sales.
- Lower base last year to aid growth on a year-on-year basis.
- Weak demand environment to impact sales for October.
- Sales of the new Marazzo and tractors to drive growth.
- Passenger vehicle sales growth seen at 12.3 percent and commercial vehicle sales seen 31 percent higher.
- Strong domestic motorcycle demand and export growth to drive sales in October.