Delayed Festival Season To Hurt Auto Sales In September
A delayed festive season, rising oil prices and a higher base are likely slow down auto sales in September, according to BloombergQuint poll of analysts.
“There have been market concerns regarding some adverse factors for demand in FY19 like increase in oil prices, interest rates and insurance costs,” Kapil Singh, an auto analyst at Nomura, wrote in a report. “We still believe the bulk of the visible slowdown is due to a high base and delayed festive season.”
Macquarie too expects a slower growth in retail sales in September as the Navaratri period, considered auspicious for buying, this year falls in October. Amit Mishra, an analyst at Macquarie, however, said, “Our channel checks do not indicate any material impact of rising fuel prices or increase in third-party insurance costs on passenger vehicles or two-wheeler demand.”
Rising fuel prices and hardening interest rates impact demand for cars and two-wheelers. Recent price hikes to offset commodity costs and a weaker rupee could also hurt demand. Nomura expects a double-digit growth only for the medium and heavy trucks.
Here are the key factors according to Nomura that will impact individual automakers:
- Strong demand in the medium and heavy vehicles segment to drive sales for September.
- Strong exports and three-wheeler sales to drive growth. Domestic motorcycle sales would slow down due to a delay festive season and a higher base.
- The sales volumes of the Royal Enfield motorcycles are expected to slow down. Watch out for impact of worker strike at its Chennai plant.
- Nomura expects a 6 per cent growth due to delays in festive season this year.
- A weak demand due to rising fuel costs and rising prices may impact sales.
- Utility vehicle sales growth expected to be flattish despite the launch of the Marazzo. Tractor sales expected to remain under pressure.
- Domestic passenger vehicle sales are expected to grow 28 percent year-on-year. A healthy demand for trucks will aid growth.