Strong Festive Demand May Boost Auto Sales In October, Say Analysts
Automakers are anticipating strong sales during the festive season.
Factory gate sales for most automakers is expected to improve on year-on-year basis in November as original equipment makers ramp up production anticipating strong sales during the festive season, according to a BloombergQuint poll of four analysts.
Analysts expect wholesales to grow year-on-year for all segments barring commercial vehicles aided by inventory restocking to meet festive demand. Demand for passenger cars and two-wheelers is likely to remain skewed towards semi-urban and rural markets.
Commercial vehicles sales are like to remain lower compared to last year but is seen improving on a sequential basis because of higher light commercial vehicle sales, the analysts said. Demand for tractors remain steady aided by a healthy monsoon and good kharif sowing but are likely to see muted growth owing to higher base.
“Our channel checks indicate dispatches continue to be strong across segment in October. Wholesales numbers would be higher than retails due to inventory refilling to meet festive demand,” said Abhishek jain, auto analyst at Dolat Capital. “We expect two-wheeler/passenger vehicle/ tractor dispatches to improve by 11%/10%/1% YoY while commercial vehicle sales to contract by 2% YoY for October.”
Automakers, too, were optimistic. “The momentum gained during the last two months has continued during Navaratri festival as well. As the numbers come in, the retails are close to 25% more than last year. So far, we have been maintaining that last year was not such a good year, so we should not really look at the numbers,” said Tarun Garg, executive director of sales, marketing and service of Hyundai Motor India. “But I believe things had started moving up during the festival last year. So, I think it’s a very positive momentum that has come in.”
(Estimates compiled from Jefferies, Motilal Oswal, Emkay and Dolat Capital)