Auto retail sales race ahead in November on festive demand


NEW DELHI : Retail sales of automobiles in India reached a record high in November as customers rushed to buy new vehicles undeterred by rising loan rates and higher fuel prices.

Sales hit 2.38 million units during the month, 26% higher than the 1.89 vehicles sold in the same month last year. It was the highest monthly sales, with the exception of March 2020, when sales received a boost a month before the industry shifted to new Bharat Stage VI emission norms, which made new vehicles costlier.

Sales of passenger vehicles and commercial vehicles in November surpassed the pre-covid sales peak of 2019 by 5% and 6%, respectively, while two-wheelers reached within touching distance of the record sales seen in 2019, showed data from the Federation of Automobile Dealers’ Association (Fada) which tracks new vehicle registrations.

Retail sales received a fillip from sustained festive season momentum and spillover from October, along with the ongoing wedding season in several parts of India.

Retail sales in November 2019 stood at a total of 2.34 million vehicles.

“The two-wheeler segment has responded well to the wedding season, and demand has continued after the festive season.

Till August, the two-wheeler segment was under stress, but after that, we have seen some signs of recovery and growth on a year-on-year basis.

However, we will wait to see sustained demand for a couple of more months to change our stance from cautious to positive,” said Manish Raj Singhania, president of Fada.

“Further, we saw wholesales were behind retail last month, which indicates a lot of stock correction is happening,” he added.

While the 125cc and higher segment of two-wheelers grew at twice the pace of the overall two-wheeler industry, the stress in the entry-level and bottom-of-the-pyramid market in urban and rural regions indicate demand headwinds aren’t over yet.

There are, however, caveats to the increase in registration for two-wheelers. According to dealers, a focused thrust by two-wheeler market leader Hero MotoCorp on ensuring registrations of vehicles sold by two-wheeler sub-dealers is done in the same month of their sale to protect retail market share also played its part in clearing the retail pipeline.

According to Fada, the onset of the harvest season is likely to aid demand recovery for two-wheelers.

The March quarter is typically one where automakers see the highest retail sales.

Dealers have a positive outlook for sales in December as well.

“Last year, there were no consumer schemes in December owing to low stocks due to supply chain issues; now every OEM has hefty discounts for in-stock vehicles,” Singhania said, referring to schemes on offer on select passenger vehicle models.

Waiting periods have come down for many heavily booked models, but automakers need to ensure production is being matched with demand correctly, he added.

“This will definitely attract the customer, as prices will go up in January, and then once again in April as phase two of the BS-VI norms kick in,” Singhania said.

To be sure, continuous rate hikes by the Reserve Bank of India and the threat of fresh disruptions in the supply chain due to a resurgence of covid-19 in several parts of the world and lockdowns in China could play spoilsport for the domestic automobile industry.

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