Retail demand of cars and two-wheelers saw a slight improvement in November as sales grew 6.25% and 4.6% y-o-y, respectively, driving up overall auto sales by 5% y-o-y. Experts, however, believe demand may remain subdued in the near term as transition to new emission norms from April 2020 will see a rise in prices. “Sharp price escalation post BS-VI is likely to be a headwind to demand recovery at least initially,” analysts at Jefferies said. Commercial vehicle sales remained weak for the 11th consecutive month with retails — vehicles sold by dealers to customers — falling 8.6% y-o-y, as discounts notwithstanding, fleet operators and business entities chose to stay away from purchases.
Wholesales — vehicles sold by manufacturers to dealers — across segments fell 12% y-o-y as dealers had enough stock and manufacturers remained cautious while planning to exhaust the BS-IV models from the market. Passenger vehicle despatches in November fell by a marginal 0.84% y-o-y, as festive season demand helped in inventory correction. Moreover, a low base and a steep 33% y-o-y rise in SUV sales limited the decline in total car despatches, data released by Society of Indian Automobile Manufacturers (SIAM) showed. The minor decline in November was still better compared to the last 11 months before October when car sales saw a fall of over 20% y-o-y. Better numbers from Maruti Suzuki helped arrest the fall along with new entrants Kia Motors and MG Motor, who did not have to deal with the unsold inventory.
Analysts believe the inventory of cars has come down to normal levels on account of robust sales in October, when most of the festivals were celebrated. “Overall, the PV industry data indicates stabilization,” Nomura analysts said.
SIAM director-general Rajesh Menon said new launches in the utility vehicle segment has helped increase sales in October and November.