India’s passenger vehicle and two-wheeler sales accelerated in August for this first time this fiscal offering relief to automakers wracked by disruptions from the coronavirus pandemic. The sales boost came as companies sought to replenish dealer stocks to meet a potential spurt in demand during the festival season. A lower base of the year-earlier month also helped.
Sales of cars, utility vehicles, and vans grew 14.1% year-on-year (y-o-y) in August to 215,916 units, according to data released on Friday by the Society of Indian Automobile Manufacturers (Siam). Continued demand for compact cars and entry-level utility vehicles is driving sales growth, the data showed. Sales are counted as wholesales dispatches and not retail sales.
“We are beginning to observe growth which is instilling confidence in the industry, especially in the two-wheeler and the passenger vehicle segments,” said Kenichi Ayukawa, president, Siam.
“The industry witnessed y-o-y growth in August 2020, but it is to be recognized that the base figure in August 2019 was very low, as the industry had shown a decline of 32% for passenger vehicles and 22% for two-wheelers,” Ayukawa said.
The auto industry was one of the worst affected as a nationwide lockdown enforced from March-end to curtail the spread of coronavirus forced the closure of factories and showrooms.
When the lockdown was lifted, automobile manufacturers and auto parts makers faced a shortage of skilled contract workers after millions of people left cities for their homes in small towns or villages.
Utility vehicle sales rose 15.5% y-o-y in August to 81,842 units as a result of higher sales by companies such as Maruti Suzuki India Ltd, Hyundai Motor India Ltd, and Kia Motors India Ltd. Car sales grew 14.13% y-o-y to 124,715 units, the Siam data showed.
Vehicle wholesales, however, do not reflect retail demand. Showroom or retail sales of passenger vehicles fell 7.12% y-o-y to 178,513 units in August, according to data released by the Federation of Automobile Dealers Associations (Fada) on Tuesday. Two-wheeler sales dropped 29% to 898,775 units.
Mint reported on Friday that the divergence in wholesales and retail sales has auto dealers worried that they may be saddled with large stocks after the festival season despite the recent rebound in sales.
Maruti Suzuki India Ltd, the country’s largest carmaker, reported a 21.7% y-o-y growth in domestic sales in August to 115,325 units. Hyundai Motor India Ltd posted a 19% rise to 45,809 units.
In the two-wheeler segment, scooter sales fell 12.3% y-o-y to 456,848 units though motorcycles recorded a 10.1% rise to 1.03 million units amid a recovery in demand for entry and executive segment motorcycles in the rural and semi-urban markets. Overall, two-wheeler sales grew 3% to nearly 1.56 million units.
Rural and semi-urban markets have helped domestic two-wheeler sales rebound faster than other segments. A good summer crop, decent monsoon, government schemes and comparatively less spread of covid-19 pandemic have aided the recovery in rural markets.
Siam has earlier forecast automobile sales to fall in the range of 26%-45% across vehicle categories due to the adverse impact of the pandemic.