Automakers likely to dispatch around 290,000 units to retail outlets in July

India’s passenger vehicle makers are expected to dispatch around 290,000 units to retail outlets in July, with consumer demand bouncing back strongly since the easing of lockdowns by state governments.

With pent-up demand boosting sales, wholesale volumes this month are likely to be the highest for July in three years and at levels similar to 2018.

Passenger vehicle sales in India had peaked at 3.39 million units in calendar year 2018. While the 2021 annual sales are unlikely to touch the 2018 level, due to the disruption caused by the second wave of the coronavirus outbreak earlier this year, senior auto industry executives termed the recovery being witnessed in the market as extremely positive.

Factory dispatches this month are expected to be 45-47% higher than the 197,791 units sold in July 2020 and 200,790 units the same month of the prior year. Dispatches this month, in fact, are at around 95% of the monthly average of the January-March period of 2021, when passenger vehicle manufacturers had posted record quarterly numbers.

“After the unlock which started in the middle of June, there has been a sharp increase in enquiries, bookings and retail sales. This had led to better projection for the industry in July. Of course, there is an element of pent-up demand as markets were shut for about one-and-a-half months,” Shashank Srivastava, senior executive director (marketing and sales) at market leader

told ET.

The recovery being seen in the market is “better than expected”, he said.

A lead indicator of revival, average daily bookings this month, are 20% higher than that recorded in June 2021 and 80% of the January-March 2021 quarter, prior to the second Covid wave hit India.

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“As we saw post the first Covid wave, the customer shift towards personal mobility, a similar trend is being witnessed post wave 2. We are seeing very good traction as of now,” said Tarun Garg, director (sales, marketing and service) at Hyundai Motor India. “I would say it is a very promising start post Covid 2, especially considering the kind of damage Covid had done to India specifically.”

In fact, retail sales this month are expected to better wholesale numbers, or the factory dispatches.

“We have seen good growth in walk-ins and fresh orders in July. Enquiry levels are currently sustaining. Retail sales of passenger vehicles this month should be at least 50% higher when compared YoY and could be 10-15% more than July 2019,” said Vinkesh Gulati, president of the Federation of Automobile Dealers’ Association. Vehicle sales usually slow down during the monsoons, but coming out of lockdowns and with an order backlog, that has not been the case this month, he said.

New product launches are also expected to support sales, along with pent-up demand and preference for personal mobility.

There are ample signs of recovery across both urban and rural markets, said Srivastava. “Unlike last time (post the first wave when rural markets had spurred demand), this time even the bounce-back in urban markets has been very good. Fundamentals of the rural economy remain strong. Monsoons seem to be normal, kharif sowing has been as per plan, rabi crop has been good,” he said.

Concerns, though, persist over the possibility of the outbreak of a third wave of the pandemic.

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“Inquiry levels are healthy and up by around 10% over Jul’19 levels,”

said in a note Wednesday. “Salary increases for government employees have also created PV demand, leading to higher retail. With the surge in fuel prices and increased penetration of CNG in newer cities, demand for CNG-run vehicles has increased, benefitting MSIL (Maruti Suzuki),” it said.

Meanwhile, inventory is low at enough to last only 10-20 days.



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