Auto industry update Oct-20!
Last updated: 04 Nov, 2020 | 08:06 am
Record two-wheeler sales in Oct-20
- Continuing the path of rapid recovery from the zero sales in April, Indian two-wheeler manufacturers have posted record sales in October-20. Most of the leading players have registered strong domestic growth, even as they beefed up their dealer inventories in preparation for the ongoing festive season, ahead of Diwali.
- Hero MotoCorp, the world’s largest two-wheeler manufacturer, sold 8.06 lakh units of motorcycles and scooters in October 2020 – its highest-ever sales in any single month.
- Continuing to strengthen its market leadership, Hero MotoCorp registered a 35% YoY rise in sales in the month. Hero MotoCorp remains India’s largest two-wheeler manufacturer with a market share of more than ~40%.
- India’s 2nd largest two-wheeler player, Bajaj Auto too saw a record 18% rise YoY rise in Bajaj Auto to 4.70 lakh units in the month, aided by highest ever sales of Pulsar (1.70 lakh) in Oct-20. Overall, the company's total sales rose 11% to 512,038 - highest on record.
Four-wheeler car sales
- After a complete washout in the month of April, the passenger vehicle segment has reported a steady recovery in the last six months.
- Passenger car sales have seen a rapid recovery for the third straight month Oct-20, led by India’s largest car manufacturer Maruti Suzuki recording 19% on-year rise in total sales to 1.92 lakh vehicles.
- Tata Motors and Hyundai have also shown robust growth in the month, aided by easing of lockdowns in various states. The table below shows data on domestic passenger vehicle sales for various manufacturers.
- Demand from rural areas continues to remain strong on the back of good monsoons, increased government support via crop prices. “Pent up demand, shift to personal mobility, inventory building for the festive season and better financing availability helped the carmakers to post robust YoY growth in Oct-20.” However, the demand recovery continues to be inclined towards lower end of the segment.
- OEM’s have started off the festive season on a strong note. Maruti said retail deliveries during Navratri grew 27% year-on-year to 96,700 units. This is a good sign, as it indicates that the urban markets are also catching up with the recovery.
Commercial vehicles still subdued
- Commercial vehicles and three-wheelers remain the worst affected in this pandemic. Given the fact that consumers are unwilling to use public transportation to practise social distancing, this segment could remain under pressure in the near-medium term.
- The segment has witnessed a sharp drop in volumes during the past months, due to economic uncertainty, revision in load-carrying norms, absence of major infrastructure and construction projects and COVID-19 fear of public transport. Given these factors, light commercial vehicles (LCV) are making better sales than heavy & medium commercial vehicles (M&HCV), so far.
- While the sales in Oct-20 have improved over the previous months, this stress in the commercial vehicle sector still remains a worry.
- Going forward, light commercial vehicles (LCV) are expected to make better sales than heavy & medium commercial vehicles (M&HCV) as infra and construction projects remain muted. Even though there has been some revival, the numbers are yet to recover to pre-Covid levels.
- Tractors remains another bright spot in the auto industry, with players such as Escorts and M&M seeing record-high sales for the third consecutive month in Oct-20. “Record tractor sales in the month was aided by an increase in sowing area, thereby indicating a bumper harvest, bountiful monsoon, good rural cash flows and base effect.”
- Tractor sale volumes are expected to grow 10-12% in FY21 as compared to the previous year, primarily driven by strong rural income owing to solid crop harvest.
- The timely arrival of the south-west monsoon, combined benefits of a record crop output, Government support for Agri initiatives and very good progress in the sowing of the Kharif crop have led to positive sentiments in the rural areas. This has led to a rapid recovery in two-wheeler and tractor sales for the fourth consecutive month now.
- A preference for personal mobility has been an important tailwind for low-cost model makers like Maruti Suzuki and other passenger vehicle manufacturers. This trend has led to the share of first-time car buyers for Maruti growing to 48% from 43% a year ago. The resurgence in sales has also been helped by a low year-earlier base as well as buoyant rural markets this year. The share of rural markets to Maruti’s total sales has risen to 41% during Q2 from 38% a year earlier.
- These factors along with the upcoming festive season of Diwali are expected to keep the momentum going over the next few months for two-wheelers as well as rural-focussed vehicles such as tractors and trucks used for transporting argi materials.
- Commercial vehicles and three-wheelers remain the worst affected and are likely to remain under pressure in the near-medium term.