Passenger vehicles see strong recovery at 26.45% rise in September sales; all eyes on festive demand

After four straight quarters of decline, passenger car wholesale in the second quarter registered a strong 17 percent growth at 726,232 units albeit on a low base of last year when sales had declined by a record 29 percent.

In September, car manufacturers dispatched 272,027 units from their factories to dealerships, a 26.5 percent growth over last year and roughly the same level as that of September 2018.

 

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

These figures, collated and released every month by the Society of Indian Automobile Manufacturers (SIAM), need to be taken with a pinch of salt as they are a more correct representation of the optimism of manufacturers than actual demand on the ground, which is best reflected by retail sales released by the Federation of Automotive Dealers Association (FADA).

Typically, manufacturers produce and ship more vehicles in September to stock up at dealerships across the country in anticipation of bumper demand during the annual festive season in October-November.

 

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The positive trajectory is visible across other segments as well. Two wheelers saw an 11.64 percent growth in September, and in the second quarter, the sales have recovered to the levels of last year.

Motorcycles have led the growth here, reiterating the stronger demand in rural parts of the country. Sale of commercial vehicles and three wheelers-two segments that are dependent on freight availability and are a truer reflection of the overall state of economy in the country, however, remained deep in the red.

 

"In the month of September 2020, Auto Industry witnessed improvement in the sales of Passenger Vehicles by 26.45 percent and two-wheelers by 11.64 percent, while sales of three-wheelers registered a de-growth of -71.91 percent, as compared to September last year," said Rajesh Menon, Director General, SIAM.

"Further, in the quarter, July-September 2020, passenger vehicles grew by 17.02 percent, two-wheelers grew by 0.17 percent, three-wheelers saw a de-growth of -74.63 percent and sales of Commercial Vehicle declined by -20.13 percent, compared to the same Quarter in 2019," Menon added.

Also read: Retail auto sales in August dip 27%, hurt hopes of strong rebound

While not a lot should be read into the September wholesale figures, it does indicate that supply side constraints on production due to the coronavirus induced lockdown in April and May that had hampered the industry in the first quarter, have subsided. Factories across the country are now running at decent levels. The sustainability of these green shoots would however depend on the festive season.

"The Indian automotive industry is working hard amidst this tough COVID-19 situation to increase production and sales, while ensuring the safety of customers and employees. In Quarter-2, some segments have shown the signs of recovery. Passenger Vehicles and Two-Wheelers are positive, although on a very low base of previous year," said Kenichi Ayukawa, President, SIAM.

"We are expecting good demand in the festive season starting tomorrow. Thanks to government intervention, auto loan interest rates are below 8 percent, the lowest in a decade and that should encourage customers to purchase new vehicles," he added.

Also read: Ahead of festive season, Maruti records 34% jump in passenger vehicle sales in Sept