- Retail sale of passenger vehicles grew by 13.6% in the 42-day festive period this year but two-wheelers declined by 6.3%
- Demand has started to drop post festive period. Sales of PVs grew 4.17% in November, two-wheelers declined 21.4%
- For industry as a whole, sales declined 19.3% in November, 4.74% in festive period
- Dealers concerned about high two wheeler inventory of 45-50 days. PV inventory now at manageable level of 25-30 days
The much anticipated festive cheer for automobiles did brighten up prospects for the domestic passenger vehicle segment, which registered a 13.6 percent growth in retail sales in the 42-day period but an unexpected 6.3 percent decline in sales in two wheelers-the biggest segment of the industry in volume terms, has dampened the overall mood.
Tractors and passenger vehicles were the only two segments to report an outright growth during the festive period. A record 73,003 tractors were sold between the start of October and mid November-a growth of 48.7 percent over last year, while passenger vehicle sales were at 431,597 units. This helped bring the inventory levels for the latter to a manageable 25-30 days.
The optimism was however, clearly missing in the other segments. The two-wheeler industry had built up record levels of stocks at their dealers in the run up to the festive season in anticipation of bumper consumption. The optimism was on the back of positive early trends thanks largely to a resilient rural economy. Based on the actual retail sales figures by the Federation of Automotive Dealers Association today, all of that seems to have come to a nought.
Sale of two-wheelers declined by 6.31 percent at less than 2 million units in the festive period this year while three-wheelers registered a 60.3 percent drop. Commercial vehicles was down 22.3 percent. As a result, in spite of the growth witnessed in passenger vehicles and tractors, the overall industry posted a 4.74 percent drop in sales.
"The 42-days festive period saw good traction in the larger context of the current pandemic hit world as overall degrowth of -4.74 percent, which was much lower than our expectation. While registrations during Navratri were tepid, people came out in good numbers to purchase vehicles during the Dhanteras - Diwali period," said Vinkesh Gulati, president, FADA. "Tractor segment continued to gallop ahead. The fear of pandemic leading to safer means of travel for the entire family saw good sales in passenger vehicles as it grew in double digits at 13.6 percent."
Further, as expected or feared, the spurt in demand has already started to wear off post festive season. For the month of November, passenger vehicles continued to grow but by a more modest 4.17 percent as compared to the growth in the festive period. Similarly, two wheeler sales declined at a much steeper rate of 21.4 percent. It has rung alarm bells among the dealer community in the country as stock levels for two wheelers continue to be high at 45-50 days. For the industry as a whole, sales declined by 19.3 percent in November over last year.
Not surprisingly, the outlook for the future is not very rosy. Only 25 percent of the dealers in the country are expecting a growth in December.
"With festive season now over, heavy rains in certain parts of the country leading to crop damage and pent-up demand almost negligible, demand revival now solely depends on exciting year-end schemes. If the supply chain issues in PV segment is controlled, we may see continued growth in December," Gulati added. "We once again caution two wheeler companies and dealers to keep a check on vehicle inventory as post festivals, demand may remain subdued."