Home News India Ratings: Domestic auto sales volumes increase steadily

India Ratings: Domestic auto sales volumes increase steadily

India Ratings: Domestic auto sales volumes increase steadily

New Delhi

India Ratings
and Research (Ind-Ra) published the July 2021 credit news digest on the Indian
auto sector. The report by Tej Karan Singh, Senior Analyst, highlights the
trends in the sub-segments of the auto sector, including passenger vehicles
(PVs), commercial vehicles (CVs) and two/three-wheelers (2W/3Ws), with a focus
on sales volumes growth, market share movement, change in commodity prices and
recent rating actions.

According to the
report, the easing of lockdown restrictions led to 18% sequential and 4%
year-on-year (YoY) increase in the domestic auto sales volumes in July 2021.
Consumer sentiments have improved and automotive dealerships have reopened due
to a steady decline in daily COVID cases. But July 2021 volumes remained 16%
below pre-COVID levels.

The PV segment
benefited from the preference for personal mobility, pent-up demand and new
launches, leading to 45% YoY growth in domestic sales volumes. Furthermore, the
volumes were higher than July 2019, indicating a recovery to pre-COVID levels.

The 2W segment
saw a 2% YoY decline, but a 19% sequential growth, indicating some recovery in
consumer sentiments. Scooter sales increased by 10% YoY, while motorcycle sales
fell by 6% YoY. The recovery in 2W demand was impacted by the price hikes by
original equipment manufacturers (OEMs) and increasing fuel prices.

3Ws witnessed
41% YoY growth in July 2021. Domestic demand has fallen due to a reduced
preference for shared mobility. Exports continued their growth trend
registering an overall 101% YoY growth.

The total
production in July 2021 increased by 22% YoY, higher than the 17% YoY growth in
total sales volumes as OEMs built-up supply with the onset of festive season
beginning in August (with Onam).

Retail sales
were higher across segments on a YoY basis in July 2021 – with PV and 2W
volumes increasing 63% and 28%, respectively.

Inventory at the
dealership level for PVs remained at 30-35 days in July 2021. Inventory at 2W
dealerships remained at 20-25 days in July 2021.

Ind-Ra expects
the volume growth to continue in August 2021, driven by improving consumer
sentiments and the onset of festive season. However, the agency believes that
the semiconductor shortage could pose supply-side challenges to OEM production,
and thereby also moderate sales growth.

Source – India Ratings and Research Press Release

Image Source: India Ratings and Research Press

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