Business Today
Loading...

V-shaped recovery in auto sector; Oct, Nov sales key to determine sustainability: Honda

If you were to look at the curve, then the Indian auto industry has seen a V-shaped kind of recovery, said Honda Cars India Ltd (HCIL) Senior Vice President & Director Rajesh Goel

twitter-logoBusinessToday.In | October 11, 2020 | Updated 13:04 IST
V-shaped recovery in auto sector; Oct, Nov sales key to determine sustainability: Honda
Auto sector witnessing V-shaped recovery

Indian auto industry is on a V-shaped recovery path but its sustainability depends on how sales fare in October and November, said a senior company official of Honda Cars India. Pent-up demand, and traction in rural areas are some of the reasons behind the current surge. Additionally, consumers are increasingly preferring personal mobility over public transport due to the pandemic. But at the end of the day, it remains to be seen how long this surge will last, said the executive.

"Many people in the industry have used this term of 'cautious optimism' multiple times, which I would tend to agree with. If you were to look at the curve, then the Indian auto industry has seen a V-shaped kind of recovery," said Honda Cars India Ltd (HCIL) Senior Vice President & Director, Marketing & Sales Rajesh Goel adding that the sales figure of October and November will give a clearer picture.

"By October-end or November it should be clear whether the demand will sustain or not. In these kinds of situations, demand has gone away. To build demand is a very slow and laborious process...it is to be built up till the momentum picks up," he said. Goel added that wholesale grew significantly in September but not retail.

The Honda executive added that festive sales are critical for the year's number, which is why every vehicle maker would stock up. "No matter how bad things are, how bad the economy is or whether the lockdown is (still) there or not, for every item there is some intrinsic pent-up demand, which would have been there because of the lockdown. That would come back. How much of the number is that, one doesn't know," he said.

Goel further added that rural sector appears to be doing well on the back of good Rabi crop, better Kharif sowing and good monsoon. Government support packages have been an added benefit.

Commenting on the supply side, Goel said that industry is offering new model launches to excite the customers. Moreover interest rates have come down so finance schemes have become attractive.

On the industry outlook, Goel said, "Although we have seen a V-shaped recovery, irrespective of what the percentage is there would be a degrowth in this fiscal. Whether that degrowth is 10 per cent or 5 per cent it remains to be seen. The original prediction was almost 25-30 per cent (degrowth). Now the number may be closer to 12-15 per cent for the industry."

Also read: Recovery in auto sales pent-up demand; not sustainable: MG Motor

Also read: Blow for auto sector! Retail sales dip 10.2% YoY in September

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close